Datuk Ishak Ismail Loses Bid to Stop SC from Taking His Statement
2 November 2010   |   Kuala Lumpur
The Kuala Lumpur High Court today dismissed Datuk Ishak Ismail’s application to stop the Securities Commission Malaysia (SC) from taking his statement in relation to a pending investigation on Kenmark Industrial Corporation Bhd (Kenmark). Datuk Ishak is among those who were issued a Notice under s.134 of the Securities Commission Act (SCA) in relation to the SC’s investigations on Kenmark. Section 134 empowers the SC to question persons that it has reasonable grounds to believe have relevant information on the matter being investigated.

The SC has been actively pursuing investigation into possible breaches of securities laws at Kenmark, especially with respect to the manner in which its previous board, management and key shareholders had conducted the affairs of Kenmark that led to a crash of its share price in June 2010.

Based on available evidence, the SC had on 16 June 2010 commenced civil proceedings and obtained an injunction against Datuk Ishak, restraining him from dealing with RM10.2 million, the sum of proceeds from his disposal of 58.7 million Kenmark shares. These monies were frozen pending the outcome of SC’s civil proceedings against him. The SC had also obtained an order in the same proceedings requiring Datuk Ishak to furnish full and complete details of his assets, whether in Malaysia or elsewhere, within 4 days from the order. This is the first such case where the SC sought to prevent dealings in cash proceeds from share sales. Datuk Ishak subsequently applied to set aside the injunction and on the 26 July 2010, the High Court decided that the injunction was to be maintained but varied the terms of the order for the disclosure of his assets. In the civil proceedings against Datuk Ishak, the SC had alleged that he had committed offences of insider trading and made false or misleading statement when he purchased and subsequently sold Kenmark shares in June 2010. The case is awaiting trial.

In relation to the pending investigation on Kenmark, on 17 September 2010, Datuk Ishak applied to the Kuala Lumpur High Court, on an ex-parte basis, for leave to stop SC from recording his statement. On 23 September 2010, the judge, Yang Arif Mohd Zawawi Bin Salleh, ordered the matter to be heard inter-partes but granted an interim stay of SC’s s134 Notice pending outcome of the inter-partes hearing. When the matter came up for inter-partes hearing today, the Judge dismissed Datuk Ishak’s application and ordered him to pay costs of RM10,000/- to the SC. In consequence, the interim stay on SC’s s 134 Notice lapses. An attempt by Datuk Ishak for a stay pending appeal by way of an oral application was not considered by the Judge.

With today’s dismissal of Datuk Ishak’s application, Datuk Ishak’s bid to stop SC from recording his statement under section 134, fails. It is the SC’s submission to the Court that the interim stay order has obstructed the SC from obtaining from Datuk Ishak evidence on the events surrounding Kenmark, which is relevant to SC’s investigation.

Investor protection and ensuring an orderly, fair and transparent market are integral aspects of the SC’s role as Malaysia’s capital markets regulator. Actions that undermine investor confidence are not tolerated and the SC will take all measures to protect the integrity of the market.


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