Press Statement

by Lim Guan Eng

(Petaling Jaya, Friday): The Securities Commission (SC) should not merely reprimand but prosecute instead those responsible for Nasioncom Holdings Bhd (NS) falsifying its 2005 financial reports with fines not exceeding RM 3 million or imprisonment not exceeding 10 years to ensure confidence remains in Bursa Malaysia to uphold integrity, transparency, accountability and full disclosure. SC had publicly reprimanded NS for submitting false information in its 2005 financial statements, with respect to revenue on sales that were not transacted.

SC's investigation revealed that NS group revenue of RM194.98 million as reflected in its 2005 financial statements contained a total of RM143.11 million sales that were not transacted. These sales were recorded in the financial statements of two NS subsidiaries, namely Nasioncom Sdn Bhd and Express Top-up Sdn Bhd.

In a statement yesterday, the SC said Nasioncom had been given one month to rectify and re-issue its financial statements for the financial year ended Dec 31, 2005. Making false financial reports to the SC is a serious offence under Section 122B(a)(bb) of the Securities Industry Act(SIA) and is liable on conviction to a fine not exceeding three million ringgit or to imprisonment for a term not exceeding ten years or to both.

A mere reprimand and correction would be seen a mere slap in the wrist completely inadequate to the serious offence of trying to deceive the investor public with sales that were not even transacted. If no stern action is taken against such cheating, how can investors trust Bursa Malaysia and SC with providing complete and accurate information to make rational investment decisions?

Immediate action must be taken against those responsible for issuing the 2005 financial statements containing false transactions of RM143.11 million in sales. The auditors for NS should also be investigated and required to explain publicly how they could "approve" such false financial accounts containing RM 143.11 million of non-existent sales transactions and other inaccurate information. According to news reports, Deloitte KassimChan was auditor for NS accounts that year.

Action should also be taken against the accountants and auditors if they can not justify why they "approved" the accounts or show proof that they were similarly deceived into believing that there existed RM 143.11 million of non-existent sales transactions. Malaysia capital industry can only benefit if SC can root out sloppy or dishonest accountants and ensure that only reliable and professional accountants are allowed to operate, including those who are not so easily cheated into trusting non-existing sales revenue or transactions.