Kuala Lumpur, 23 November 2006

SC imposes RM500,000 compound on Hospitech director

The Securities Commission (SC), with the consent of the Public Prosecutor, has compounded two offences committed by the managing director of Hospitech Resources Bhd, Jimmy Goh Kai Tong for RM500,000. The two offences were compounded under sections 32B and 55 of the Securities Commission Act 1993 (SCA).
Under Section 32B of the SCA 1993, it is an offence for a director to submit false information or statement to the SC. Section 55 of the SCA 1993 prohibits a director from causing the issuance of a prospectus which contains any statement or information that is false.
The SC’s investigations revealed that both Hospitech’s application to SC for its proposed listing on the MESDAQ Market and the prospectus issued on 28 March 2006 contained false revenue figures in respect of Hospitech Marketing Sdn Bhd (HMKT), a wholly owned subsidiary of Hospitech.
The SC discovered that Jimmy Goh, the Managing Director of Hospitech at the time of the company’s submission for listing on the MESDAQ Market, had caused false sales and purchase invoices to be taken up in the accounts of HMKT for the financial year ended 31 October 2002. He went on to make a statutory declaration that HKMT’s audited accounts for the financial year ended 31 October 2002 were correct and true.
Despite being aware of this falsity, Jimmy Goh had in Hospitech’s listing submission made declarations that there was full and true disclosure in respect of all information in the listing submission and prospectus and that to his knowledge, no false information was submitted.
In compounding the offence, the SC considered the fact that false revenue figures did not affect the profits of the company as equal false values of cost of sales were incorporated in HMKT’s accounts. The SC also acknowledged the voluntary withdrawal by Hospitech on 19 April 2006 of its plans to list on MESDAQ after the SC commenced its investigation.
Also taken into account by the SC was Hospitech’s reimbursement of all monies received from successful applicants who had subscribed to the Hospitech initial public offering. The reimbursement process was monitored closely by the SC to ensure timely and orderly return of the monies.
The SC said that the severity of the compound sum meted in this case is reflective of the seriousness with which it views these offences. Company directors are expected to maintain the highest standards of disclosure, conduct and due diligence in corporate submissions and proposals.
As part of a disclosure-based regime, the SC expects all parties involved in a corporate proposal, in particular advisors and directors, to ensure that all information disclosed to the SC is true and accurate.