When fraudsters hide behind the law

LAST week, it was reported that a lawyer and his wife were subjected to a 21-day jail term and RM250,000 in damages due to a ruling on contempt of court.

It is related to a lawsuit initiated by a “business education” organisation and a self-professed “business guru” with billboards along the North-South Highway.

The lawyer and his wife were alleged to have defamed the “guru” and his organisation because they highlighted the risks and concerns about their questionable business practices under the guise of education.

All parties of the lawsuit were stated in the court’s public online database.

A few years ago, Learnabee founder Evanna Low was jailed for seven days for contempt of court after she highlighted the dangers of investing in unlicensed investment cash trust schemes.

Over the years, Kepong MP Lim Lip Eng has spoken out against fraudulent schemes, scams and money games.

He too lost a defamation suit and had to pay RM2mil (before a recent reduction to RM75,000) to direct selling company MonSpace and its founder Datuk Jessy Lai following a defamation suit filed in 2019 as he championed the rights of 15 Chinese nationals who were allegedly victims of MonSpace.

Yet, in 2021, the Malaysian Anti-Corruption Commission (MACC) forfeited RM1.5mil from Lai under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001.

Last year, Lim also raised in Parliament a list of cash trust companies that promote investment products despite not having any licences from the Securities Commission or Bank Negara Malaysia.

He called these cash trust companies a Ponzi scheme.

While he was ahead of his time, some of the cash trust companies that he highlighted ran into trouble a year later, halting client redemptions and failing to repay monies collected.

One of them was also reported to be investigated by the MACC, where the directors were remanded for siphoning client money amounting to RM104mil. Another one in investigation.

Action taken only in hindsight

Reporting to institutions yields little to no result until it gets heavily publicised. The government has tried various ways to halt scams and fraud, but many continue to get away with it.

Most action taken is in hindsight instead of pre-emptive.

The worst thing is when the mastermind or ringleader is seen in public mingling with the rich and powerful with impunity.

That is until the implosion.

We have seen the same situation with the shuttered MyAirlines fiasco.

The scheme was perpetrated by i-Serve Online Mall Sdn Bhd (i-Serve) and related companies, promising lucrative returns to the public via unlicensed investment vehicles. The court had in September ruled in favour of the 15 investors who lost RM8mil.

Yet, the restitution of their monies is facing challenges as the Attorney-General’s Chambers recently released a statement that there are no longer any assets related to i-Serve that remain under seizure by authorities.

Crime does not pay

Perpetrators of fraud are daring because the consequences are negligible compared to the high potential returns.

Time and again, new groups of syndicates and scammers emerge, luring a fresh pool of unsuspecting victims.

The reason is that they tend to get away with scant, if any, legal consequences.

Take the case of formerly listed Serba Dinamik which will always remain etched in the dark history of enforcement for our country.

A complete market capitalisation was wiped out with losses to the tune of RM7bil, yet the perpetrators only paid fines in the millions. Most institutional funds in Malaysia lost savers’ money in the saga as a result.

There is a serious need to revamp the law to protect whistleblowers and victims with harsher punishments and speedier resolution against the perpetrators.

Perpetrators need to pay with the same speed and efficiency with which the Inland Revenue Board comes after small and medium enterprises and ordinary people.

This includes the compound-first, appeal-later approach in monetary fraud cases and scams. Otherwise, most of the illicit funds would have dissipated – the same scenario with 1Malaysia Development Bhd’s mastermind and fugitive whale, Low Taek Jho, today.

For drug dealers, the death sentence or life imprisonment awaits. For fraud and scams, fines and at most minimal jail terms are the worst outcomes. I welcome Singapore’s recent decision to implement caning for scam offences as a deterrent. Malaysia should adopt this.

Too little too late

If the court’s verdict is needed before one can voice concerns or raise the alarm on scams and fraudulent schemes, what ­happens to victims or potential victims leading up to judgment day?

Many would have suffered irretrievable losses by that time.

The Ponzi scheme by Bernie Madoff ran for almost 20 years, with a lone persistent whistleblower, Harry Markopolos, ­raising concerns to no avail until the curtains came down.

The total losses suffered by the victims was a staggering US$18bil (RM76bil).

There have been many similar instances in Malaysia of money games collapsing after several years, such as MBI, JJPTR and TriumphFX.

Those who know are afraid to highlight them because some of these organisations have employed people of influence as board members.

The appearance given to the public is “do not mess with us; our organisation has former high-ranking law enforcers, judges or even politicians”.

Yet time and again, it is these very organisations that victimise the common people with elaborate and unrealistic schemes.

Life savings go down the drain with no recourse ever in sight.

Protecting the weak

The Defamation Act 1957 protects people from being sullied or tarnished without basis or facts.

However, the law itself should not be abused by those with power, money and resources to evade responsibility.

Hiding behind technicalities is an abuse of the spirit of the law. It only erodes public confidence in the judiciary system and emboldens wrongdoers.

This is especially so with monetary losses. There are grounds of defence under defamation law, including Justification, Absolute Privilege, Qualified Privilege, Reynolds Privilege and Fair Comment.

Sadly, not everyone can afford a good lawyer to fight the case against influential and corrupt perpetrators.

The court needs to protect the weak and the voiceless while encouraging individuals to speak truth to power.

Justice delayed is justice denied. It all begins with the judgments handed down in the courts and bold reform in Parliament.