Anti Climax Ending To Serba Dinamik Saga

---

The Edge Online reported on Thursday that SC came to a settlement to merely impose compound for alleged accounting fraud by Serba Dinamik. It is truly anti-climax ending to the many months of investigation and expose by Edge.
In their March 28th to April 3rd issue, they dedicated the frontpage for Serba Dinamik with a fullspread article inside with a provoking title: "What Serba Dinamik didn't want you to know". 
One would guess there is development on the SC case against Serbadk. Edge was pushing on SC to stick to their guns and prepping the public on the upcoming case.
Generally Edge summarised their one year fight against Serbadk's alleged fraudulent accounting till successfully managed got SC to charge them. Those following the issue and in the market have heard it before except the following excerpt:
Flicking through the EY Consulting report, which is part of Bursa Malaysia’s bundle of documents in its suit against Serba Dinamik, it becomes apparent why the O&G company is reluctant to let the findings of the EY Consulting report be made public.
The EY Consulting report, in a nutshell, questions why Serba Dinamik was in possession of company stamps — both of its vendors and those of national oil major Petronas, other oil majors, and of the company’s many suppliers.
Read the rest of "Serba Dinamik in the spotlight" here or the hard copy issue below:
Anti-Climax
Then came the bummer as per Edge Online report on Wednesday, below:
SC compounds Serba Dinamik, top execs RM3 mil each for submitting false revenue that KPMG flagged
Adam Aziz/theedgemarkets.com
April 13, 2022 21:20 pm +08
KUALA LUMPUR (April 13): Serba Dinamik Holdings Bhd and four top executives have been compounded RM3 million each by the Securities Commission Malaysia (SC) for submitting a false statement involving a revenue of RM6.01 billion for its financial period ended Dec 31, 2020 (FY20), which was previously red-flagged by the company's external auditor, KPMG.
The four individuals were chief executive officer and group managing director Datuk Dr Mohd Abdul Karim Abdullah, executive director Datuk Syed Nazim Syed Faisal who was chief financial officer (CFO) from June 2016 until mid-2020, its current group CFO Azhan Azmi, and vice president of accounts and finance Muhammad Hafiz Othman.

The compounds settled the criminal charges they face for submitting a false statement of the RM6.01 billion revenue for FY20 to Bursa Malaysia Securities Bhd on Feb 26, 2021.
Muhammad Hafiz was also compounded an additional RM1 million for falsifying the accounting records of Serba Dinamik's subsidiary, the SC said in a statement.
The compounds follow the public prosecutor's decision to accept the representation made to the Attorney General's Chambers by Serba Dinamik and the individuals involved regarding the charges pending in court, the SC said. A representation letter is typically sent either to reduce a charge or have the charges dropped.
The compounds were issued under Section 373(1) of the Capital Markets and Services Act (CMSA) with written consent of the public prosecutor.
"This (RM3 million) is the maximum amount of compound permissible under Section 369(a)(B) of the CMSA for submission of false information in the company's financial statement," the SC said.
Muhammad Hafiz's additional RM1 million compound is also the maximum amount permissible under Section 368(1)(b)(i) of the CMSA, for falsifying Serba Dinamik Sdn Bhd's accounting records.
For perspective, Mohd Abdul Karim's CEO and directorship in Serba Dinamik entitled him to a RM4.96 million remuneration package in the 18 months ended June 30, 2021, comprising salary, fees and other emoluments, while Syed Nazim took home RM1.23 million, according to the company's latest annual report.
Serba Dinamik's criminal charges for the falsification of revenue were framed under Section 369(a)(B) of the CMSA, while the four individuals were charged under Section 369(a)(B), read together with Section 367(1) of the same Act, which would have brought a maximum jail term of 10 years and a maximum fine of RM3 million if one is convicted for the offence.
Section 369(a)(B) of the CMSA stipulates that a person who, with the intent to deceive, makes or furnishes any false or misleading statement or report to the commission, a stock exchange, a derivatives exchange or an approved clearing house relating to the affairs of a listed corporation, commits an offence.
The issue with the FY20 revenue was first raised by KPMG to the Serba Dinamik board in May 2021. At the time, KPMG also flagged Serba Dinamik’s sales transactions, trade receivables and payables, material on site balances, as well as how it was unable to verify the counterparties involved. 
Following the revelation, KPMG refused to resign off on the FY20 accounts as Serba Dinamik’s external auditor, which resulted in Serba Dinamik suing KPMG for alleged negligence and for breaching its contractual and statutory duties as the external auditor. This led KPMG to resign from its post, citing the lawsuit hindred its ability to continue to discharge its duties as the company's auditor.
Subsequently, Bursa Securities ordered Serba Dinamik to conduct a special independent review on KPMG's claims, for which Serba Dinamik appointed Ernst & Young Consulting Sdn Bhd (EY Consulting) to do.
However, Serba Dinamik then sued Bursa for acting “in excess of power” when instructing that the SIR be conducted. It also sued EY Consulting to restrain the latter from making its findings or opinions on the company public.
While the SC’s criminal charges against Serba Dinamik have now been settled with the compounds, Serba Dinamik is still facing Bursa in court, after the latter filed a civil suit against the group for failing to comply with its directive to release the factual finding update (FFU) of the SIR by EY Consulting. The High Court had ruled in Bursa's favour to compel Serba Dinamik to reveal the findings, a ruling which Serba Dinamik has failed to obtain leave from the Court of Appeal on Monday to stay, while it appeals the High Court's decision.  
Meanwhile, it is understood that the SC is considering bringing proceedings to bar the four individuals charged from being directors of the company. 
It has been almost six months since the shares of Serba Dinamik were first suspended from trading on Oct 22, 2021. The counter last settled at 35 sen – down 78.26% since the audit issue first came to light – giving the oil and gas engineering group a market capitalisation of RM1.3 billion. 
-------------------
The frustation on the part of The Edge can certainly be appreciated. So close to finally say gotcha on Serbadk, but slipped away with merely compounds. 
One can accuse SC official of being on payroll or claim higher hands intervene. 
For that matter, accuse it on Prime Minister Ismail Sabri who happenned to make a recent trip last month to Kuching. Without anything confirmed and revealed in court, all is mere conversation.  
Budget constraint
To add to the frustration, compound as penalty to any offenses is part and parcel of the reality of law enforcement. Its perfectly legit. 
When both side agree to settle with a compound, it saves both sides the trial and tribulation of the lengthy and costly court process. 
These days of tight government spending and law enforcement budget significantly slashed since the last few years of Najib administration will see more cases settled out of court with compound. The government could not afford to go through the process and the wait. Parking meter running to warehouse evidences.   
This rumour of a compound settlement was heard at the time of writing the Petronas Carigali-Deleum remand orders on the reported eight, later nine executives suspected of corruption. 
Upon realising there could be more than meets the media report, a source tipped of that behind Deleum are powerful and influential people in the league of Tun Dr Mahathir or not surprisingly himself. 
It is all a show with the nine to get away with compound and it is paid for. The suspicion came about because Deleum is back in business with Petronas despite announcement of suspension few months earlier.         
New generation of executives
The media reported those being remanded are in the age of 35 to 45. Similarly the Serbabk executives compounded are in similar age group. One market observer noticed the practise of fake accounts by the new generation of top executive among Gen Y or millenial is rampant. 
These new generation of executives are so blatant in their self serving attitude for quick buck schemes for themselves. They are disinterested in business building or developing the organisation they are attached to. 
Anytime a large bond issue by government or major corporation particularly GLC, it is not a surprise someone will be getting kickbacks or commission channeled intricately through layered fund transfer. 
This is the generation of university students surveyed by MACC many years ago in which the majority are willing to accept bribes.
Such executives are widespread within public listed companies, and inside auditors, shareholders activist groups, GLCs, and authorities such as Bursa and SC. The fear of having their cover blown detered SC from being difficult on Tan Sri Azam Baki on the share purchase debacle.  
Championing underdog
Coupled with strange going-ons, political vengence, incomplete investigation, witholding of fact by prosecution and selective prosecution in the cases against Najib and Zahid Hamidi, it became the motivation for this blog to take an anti-establishment stance and raise questions in favour of Serbadk. 
The whole establishment and media seemed one sided to make a feast of Serbadk thus making it more thrilling and motivated to champion an underdog. 
Nevertheless, in the last posting on the Serbadk affair, this blog made it clear that the trouble issues will only be relevant on condition of a favourable outcome of EY finding on KPMG audit. 
Being right or wrong is important, but not as important as knowing the truth. The same reason for the variation from the normal stance of respecting court judgement to still question SRC judgement by Court of Appeal. 
Unfortunately, SC could not claim victory or righteousness, and to the comfort of this blog that it is not proven wrong on the Serbadk affair. Since not be out in the open, the truth will be beyond the public grasp and remain mere hearsay. Edge final story does not constitute finality or truth on the issue. 
There are still unanswered questions and rumours to verify, but this blog is moving on. 
It is left to those still concerned for truth and justice on this issue to prive and investigate further into this decision to settle and make it known publicly. Otherwise it is only conversation.  

---