Will SC head go to jail if he discloses a probe?

 

 Securities Commission (SC) executive chairperson Faiz Azmi claimed the law prevents him from disclosing if the commission is investigating the so-called “corporate mafia” where, allegedly, powerful hands work with the MACC to change control of companies.

However, the evidence indicates he is wrong.

Faiz (above) had strong words when questioned by reporters about whether he would be investigating the allegations.

Not only did Faiz refuse to reveal whether the SC was investigating the reports, but he said he could go to jail if he revealed anything about the investigations.

“Are you aware of Section 148? Section 148 says you go to jail if you discuss any investigations that are still ongoing. So, do you really want me to go to jail?” he said when asked about the matter on the sidelines of the launch of the 2026–2030 Capital Market Master Plan on Thursday, The Edge reported.

Is that really true? Can the head of an investigation agency - which has substantial investigative powers - decline any comment on a serious matter involving the capital markets because he can go to jail for that?

The irony

The irony of such a statement is that it was made on the day of the launch of the Capital Market Master Plan.

If the statement is true, what does it say about the development of an orderly capital market masterplan, one of the main aims of the SC?

The preamble to the Capital Market and Services Act (CMSA) says: “An Act to consolidate the Securities Industry Act 1983 [Act 280] and Futures Industry Act 1993 [Act 499], to regulate and to provide for matters relating to the activities, markets and intermediaries in the capital markets, and for matters consequential and incidental thereto.”

Its powers are extensive and wide-ranging and therefore it must have some leeway to inform the public accordingly when there are investigations.

Most regulatory acts allow for this as it is important for the market and players to know investigations are being conducted.

Let’s see whether Faiz, who asked reporters whether they were aware of Section 148, knew enough about it himself and whether commenting on an investigation would result in him going to jail.

This falls under Section 148. Obligation of secrecy. It reads as follows:

(1) “Except for any of the purposes of this Act or for the purpose of any civil or criminal proceedings under any written law or where otherwise authorised by the commission or subject to Section 124 of the Evidence Act 1950, no member of the commission or any of its committees or any officer, servant or agent of the commission or any person attending any meeting of the commission or any of its committees shall disclose any information which has been obtained by him in the course of his duties and which is not published in pursuance of this Act.

(2) “Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding one million ringgit or to imprisonment for a term not exceeding five years or to both.”

SC chairperson is exempt

The one that decides offence is (1) which authorises the SC to make valid exemptions (or where otherwise authorised by the commission). As Faiz is the SC chairperson, it follows that if he makes statements that do not compromise investigations, there is no way action can be taken against him.

In other words, Faiz can exempt himself when he makes needed, explanatory and clarifying statements about any investigations undertaken by the SC - he has the power to do so, as indeed he should have.

In the event, Faiz flatly refused to comment on whether the SC was investigating or not. Why, especially since the allegations made in the Bloomberg report are very serious? We can only speculate.

Among other things, Bloomberg's report titled “Who’s Watching Malaysia’s Anti-Corruption Watchdog?” alleged that some people in the corporate world were working with the MACC to make boardroom changes in companies.

It alleged that the MACC was used to pressure founder shareholders of companies to give up their stakes and exit the company at low prices and lose control. This was done by opening investigations on them.

“A loosely knit group of about half a dozen men work from the same playbook. They operate independently but sometimes join forces. One or more of them appear on the scene, often buying a stake in the target company.

“Then, the MACC starts an investigation of the founders. Their bank accounts are frozen. Often, the executives are suspended from management positions and removed from the board. In some cases, they just quit and sell their shares,” according to an excerpt from the Bloomberg report.

Faiz should have responded

So serious are the allegations that the executive chairperson of the SC, the body entrusted with the orderly running and development of the entire capital markets, on his own without prompting by reporters, should have responded strongly.

He should have given a public assurance that the SC will work with other enforcement authorities to ensure that the integrity of the capital markets is not compromised and any miscreants will be brought to book under the CMSA if they have violated any provisions.

That will have gone some way to reassure the capital markets and all players that the main authority responsible for its regulation will not stand by and allow them to be compromised by a “corporate mafia”.

Instead, as it stands, the SC does not even have the guts and gumption to even confirm whether they will investigate the allegations and get to the bottom of it. What a cop out!

So, what’s the use of a Capital Market Masterplan when the SC can’t even confirm that it will investigate alleged serious breaches of the law and take action where necessary.

That does not inspire, but destroys confidence. - Mkini

---

P GUNASEGARAM, a former head of equity research, says building confidence is the overriding factor in regulating capital markets.

The views expressed here are those of the author/contributor and do not necessarily represent the views of MMKtT.