Padini acct freeze by MACC leads to speculation biz without foot traffic is fronting money-laundering

 

“FOLLOW the money.”

The famous line from the 1978 film All the President’s Men describes uncovering corruption by tracking financial transactions. It means locating the source of funding to identify who benefits most from a crime. It is used to unearth hidden motives and evidence.

While not as explosive as the real-life Watergate scandal covered in that Oscar-winning movie, the recent freezing of bank accounts belonging to fashion house Padini Holdings Bhd by the Malaysian Anti-Corruption Commission (MACC) somehow contains shades of illicit money trails.

As reported in The Edge, the garment retailer claimed that based on information currently available, investigations by the graft buster agency involve certain external counterparties who are not employees, officers or part of the group’s management.

As consequence of the probe nevertheless, certain bank accounts belonging to the company were frozen pursuant to an order issued under Section 44(1) of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001.

In a statement on Saturday (April 26), Padini declared: “The company wishes to emphasise that based on information currently available, it is not aware of any allegation or wrongdoing on its part and understands that the freezing order is a procedure taken in the course of the investigation.”

Given this case involves a well-known brand, speculation has become rife as to which retailers were conducting alleged illicit business or at the very least engaging in creative accounting.

This was precisely the observation of self-proclaimed legal advisor Ikhwan (@JatIkhwan) on X who confidently declared that “trust me, some of the many shops in a mall are fronts for money laundering”.

“In today’s case, the MACC has frozen several Padini accounts,” he quipped.

Alluding to the Padini affair, the post has generated 460.9K views at time of publication with plenty of amateur sleuths also in agreement that plenty of otherwise legitimate-looking businesses were just a façade for illegal activities.

It was postulated that such practices were an open secret. How else could shops with no foot traffic continue to survive for years, wondered a few suspicious shoppers.

Shops that continue to “thrive” in ghost malls or on floors that have poor foot traffic are also seen as confirmed money-laundering operations.

High-end malls were full of such shops, claimed one commenter, while another extended the suspicions to the numerous ad hoc booths in shopping complexes, noting that the rental for such space was not cheap.

It was observed that strangely enough, the lack of customers did not seem to affect these shops’ bottom lines.

More than a few consumers highlighted suspicious businesses in their locales that seemed to be hiding something behind its legitimate façade.

These included the ubiquitous mobile phone shops, opticians, bridal wear boutiques and beauty spas that seem to be unaffected by the lack of customers.

One cynical property guru opined that this was one of the reasons why malls keep sprouting up in Malaysia.

Above all else, the MACC was applauded for its efforts with one commenter surmising this may be Tan Sri Azam Baki’s legacy before he calls it quits as head honcho of the graft buster come May 12.

The Padini affair has certainly got tongues wagging as to which other businesses were hiding illicit money trails. Indeed, as in the film – if one follows the money – one will find the culprits. –  Focus Malaysia

 

Editor’s Note: Padini fell as much as 15 sen or nearly 10% to RM1.40, its lowest since November 2020 in early morning trade today (April 27).

The stock was off lows at RM1.43 during the mid-day market break, according to The Edge, and was traded at RM1.43 with 26.5 million shares exchanged hands at 3.43pm, thus valuing the company at RM1.41 bil.