THE Minority Shareholders Watch Group (MSWG) has issued an announcement on the current announcement by the Securities Commission that Serba Dinamik Holdings Bhd
and sure people charged with submitting a false assertion to Bursa Malaysia Securities Bhd will likely be made to pay a compound to absolve them of the costs.
In the assertion issued right now, MSWG CEO Devanesan Evanson urged the Attorney-General’s Chambers to supply a motive for the decision in the curiosity of transparency.
Here is the assertion in full:
THE REASON FOR THE DECISION
To compound or to not compound could very properly be the query in the case of compoundable offences. The decision to compound the 4 executives in the Serba Dinamik Holdings Berhad case has raised a myriad of questions, ideas, and opinions.
As a basic precept, crime mustn’t pay. And in that vein, regulators usually nice triple the quantity of illicit acquire (or loss prevented) to ship residence the sturdy message that they won’t permit anybody to revenue from their crime. Likewise, as an added deterrent, jail phrases are additionally imposed to drive residence this message. The message to be despatched is that there shouldn’t be any arbitrage between illicit benefits and the price of the sanction.
In the case of Serba Dinamik, the Securities Commission (SC) has said that the decision to compound was a results of the decision of the Public Prosecutor to simply accept the illustration made to the Attorney-General’s Chambers (AGC) by Serba Dinamik and the people concerned concerning the costs pending in courtroom.
The Federal Constitution (Article 145 (3)) states that the AG shall have the facility, exercisable at his discretion, to institute, conduct or discontinue any proceedings for an offence. Thus, the AG has the only and unfettered discretion to cost or discontinue the cost in opposition to the accused individual or firm. In the curiosity of transparency, causes must be given why a decision is made to compound as an alternative of pursuing the cost.
A compound is conclusive in that it absolves these charged of any additional motion in relation to the cost. The SC takes instruction from the AGC earlier than prosecuting anybody. And to this extent, the SC could also be obliged to not proceed with a prosecution.
Here, it additionally must be defined why an earlier decision to proceed with the legal fees was later substituted with a compound. The motive for this also needs to be made clear. In the curiosity of transparency, the AGC might elevate the veil of its absolute discretion and clarify the explanations.
The legal fees that the 4 executives confronted had been below Section 369(a)(B) of the Capital Market and Services Act (CMSA), learn along with Section 368(1)(b)(i) of the identical Act. This carries a most jail time period of 10 years and a most nice of RM3 million if one is convicted of the offence.
The SC, the statutory regulator, imposed the utmost compound permitted. The SC has said that the RM3 million is the utmost quantity of compound permissible below Section 369(a)(B) of the CMSA.
In providing a compound, one have to be conscious of not making a harmful precedent.
It has been noticed that some fees of lesser diploma in the previous weren’t compounded however went on to trial with resultant jail phrases. We have to be conscious of the message that we’re sending to the capital market and potential wrongdoers. Crime should not pay and must not ever be seen to be paying. Sanctions should act as a enough deterrent to potential wrongdoers. For each wrongdoing, there have to be the understanding of the visitation of a sanction.
The AGC might want to sufficiently distinguish the Serba Dinamik case from different instances in future and explains its causes clearly. And that’s the reason there’s a must know the explanation for the decision. The AGC could now be constrained from accepting a illustration for a compound in future instances the place the costs are of lesser severity because of the priority set.
The judges do it on a regular basis after they make choices – they’ve their ratio decidendi.
Ratio decidendi is a Latin phrase which means “the explanation” or “the rationale for the decision”. The ratio decidendi is “the purpose in a case that determines the judgement” or “the precept that the case establishes”. In brief, it’s the motive for the decision.
Likewise, each train of discretion must be backed by a motive for the decision.
What is required is probably some structural reform. Absolute discretion is quick going out of trend. It is being changed by accountable discretion. All discretion must be tempered with accountability – the ratio decidendi. Every train of discretion must be backed by the rationale for the train of a specific discretion.
In the case of Serba Dinamik, many traders have suffered losses –they will be unable to recoup a lot of their losses, a minimum of in the foreseeable future. It has certainly been a tragic misadventure for many minority shareholders.
The train of the discretion whether or not to compound or to not compound a capital market offence has far-reaching implications for the capital market. It could hinder the event of a good and orderly capital market that prides itself on investor safety.
We will not be alone. Our capital markets have to be enticing sufficient for international investments too. There have to be certainty on how we cope with issues. Perceptions are simply as essential as actuality. In the phrases of Lord Chief Justice Hewart, “justice should not only be done, but should manifestly and undoubtedly be seen to be done”.
It is all about transparency – the query to be answered is ‘Why compound?’. What is the ratio decidendi?
Devanesan Evanson, Chief Executive Officer
