SC secures conviction of Yap Kim Seng for falsifying information in Pasaraya Hiong Kong case

The Securities Commission (SC) today secured a conviction against Yap Kim Seng, who pleaded guilty and admitted to submitting false information to the SC in respect of Pasaraya Hiong Kong Sdn Bhd (PHK) at the Kuala Lumpur Sessions Court 1.
Yap Kim Seng was the Managing Director of PHK at the material time. On 25 April 2005, the SC charged him and Yap Kim Fatt (then Executive Director of PHK) for causing to be submitted to the SC false information, namely the revenue of PHK for the year ended 31 March 2003, as contained in PHK’s Financial Statements for the year ended 31 March 2003.
The two accused, being directors of PHK, were deemed to have committed the offence under section 32B(1)(c)(aa) of the Securities Commission Act 1993 (SCA) read together with section 138(2) of the SCA.
The false information was submitted in connection with Ocean Capital Berhad’s application to SC for its proposed corporate restructuring exercise, which included the proposed acquisition of PHK.
Based on the facts of the case that were admitted by Yap Kim Seng, PHK’s Financial Statements for the year ended 31 March 2003 contained fictitious sales totaling RM7,786,665, which had the effect of increasing PHK’s profit before tax to RM13,073,565. Had the fictitious transactions not been captured in the accounting records of PHK, it would have recorded a profit before tax of RM5,286,900. This would have resulted in PHK reporting an after tax profit of well below the minimum RM8,000,000 required for a listing on the Main Board of the Kuala Lumpur Stock Exchange.
The Sessions Court sentenced Yap Kim Seng to two years’ imprisonment after taking into consideration the potential loss that could have occurred had the restructuring proposal been implemented. The Court viewed a deterrent sentence as necessary to maintain public confidence in the stock exchange and to prevent the erosion of public confidence in enforcement agencies.
Following the conviction of Yap Kim Seng, the charge against Yap Kim Fatt was withdrawn.