The Securities Commission (SC) scored a first with the filing of a civil suit against Kenneth Vun @ Vun Yun Liun (Kenneth Vun), managing director and a shareholder of FTEC Resources Bhd (FRB) to compel him to restitute RM2.496 million to the company. The sum represents part of proceeds raised by FRB in an initial public offering in 2003.
The SC filed the suit following its investigation into the utilisation of the public issue proceeds by FRB, which uncovered that Kenneth Vun had utilised a portion of the proceeds for his own benefit and personal use. This utilisation of proceeds was not in compliance with the conditions set by the SC in the listing approval of FRB.
Findings further revealed that Kenneth Vun’s personal utilisation of the proceeds had not been reflected in the FRB Group’s unaudited quarterly financial statements for the first quarter ending on 31 March 2004 released to Bursa Malaysia Securities Bhd.
As a result of the findings, in the suit filed on 26 September 2007, the SC is seeking the following court orders:
- that Kenneth Vun personally make restitution of the sum of RM2.496 million to FRB;
- that Kenneth Vun be restrained from directly or indirectly managing funds of FRB and/or any of the companies in the FTEC Group of Companies in the absence of proper controls being put in place by the said companies including but not limited to external supervision by the SC;
- that Kenneth Vun to cause FRB to properly disclose in its audited report for the next financial year, the manner in which the sum of RM2.496 million had been utilised; and
- that Kenneth Vun be made personally accountable for the return of any sum of interest or profit made from the utilisation of the sum of RM2.496 million to FRB.
Adopting a strategic approach to enforcement, the SC is increasingly tapping on its civil enforcement powers to ensure effective and efficient remedies, whilst continuing to take criminal actions in appropriate cases.
This action against Kenneth Vun is one of the numerous civil enforcement actions undertaken by the SC recently against directors of public listed companies for corporate governance misdeeds. These actions serve as a reminder that it is the responsibility of directors to act in an honest and accountable manner in discharging their duties, and especially when dealing with public funds.
Other civil actions taken by the SC include the disgorgement of companies’ ill-gotten gains and the freezing of assets to prevent them from being diverted. Notably, in the case of The Ayer Molek Rubber Company Berhad, the SC had obtained an injunction to safeguard RM20 million of the company’s monies to prevent the company and its solicitors from disposing or dealing with the said monies representing the company’s sale proceeds of several pieces of lands in 2006 and 2007.
More recently, in the Swisscash Internet investment scam where the SC had obtained a worldwide Mareva injunction to prevent the disposal of assets by the defendants, the SC had also secured a Court Order to direct one of the defendants, Amir Hassan, to transfer RM35 million of Swisscash monies held in bank accounts overseas back to Malaysia.