Friday, October 28, 2011

Ex-Transmile independent directors fined, jailed

KUALA LUMPUR: Two former independent directors of TRANSMILE GROUP BHD [], Jimmy Chin Kim Feung and Shukri Sheikh Abdul Tawab were jailed one year and fined RM300,000 in default six months imprisonment for authorising a misleading statement to Bursa Malaysia.

The Securities Commission said on Friday, Oct 28 the Kuala Lumpur Sessions Court found them guilty under section 122B(b)(bb) of the Securities Industry Act 1983.

Their offence was authorising the furnishing of a misleading statement to the stock exchange in Transmile's quarterly report on unaudited consolidated results for the financial year ended Dec 31, 2006.

'The misleading statement was with respect to the unaudited revenue figures which were reported to the stock exchange for both the fourth quarter of 2006 as well as the cumulative period for 2006,' said the SC.

According to the SC, Chin and Shukri, were at the material time, in February 2007, members of Transmile's audit committee and board of directors.

They were charged in 2007 and claimed trial. The trial started in 2010 and the prosecution called 11 witnesses to prove the charge against both accused. Both accused gave sworn evidence in their defence.

Sessions Court Judge, Justice Datuk Jagjit Singh Bant Singh, in passing the sentence of one year imprisonment and a fine of RM300,000, had said the public interest factor must be given paramount consideration.

He said the audit committee is a vital organ of the company and particularly important in the corporate governance.

Jagjit Singh said the audit committee had specific duties, functions and responsibilities and that the investing public relied on them very much.

However, evidence showed a blatant disregard of the seriousness of the concerns on the contra transactions when the audit committee was told by Deloitte that the contra transactions were very unusual and lacked commercial justification.

Jagjit Singh said these were sufficient warning bells and as audit committee members they should have raised these issues to the board but instead failed to do so.

The trial of two other former directors of Transmile -- Gan Boon Aun and Khiudin Mohammed -- who were executive directors at that time, are pending in the Kuala Lumpur Sessions Court.

The SC said the charges against Gan and Khiudin were also because of the misleading statements made in the same quarterly statement which was submitted by Transmile to Bursa Malaysia in February 2007.

Both accused had, on March 22, 2011, been called to enter their defence after the close of the prosecution case.

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