SC secures conviction of Indonesian businessman for falsifying information in prospectus

Kuala Lumpur, 25 August 2005

The Securities Commission (SC) secured a conviction on 22 August 2005 against Kenneth Chow, also known as Wira Tjakrawinata, for submitting false information to the SC.

Kenneth Chow faced three charges:

  1. Failing to advise the SC, upon becoming aware, before the proposal for the restructuring of Omega Holdings Bhd (Omega proposal) was fully implemented, that the information provided in the proposal may be false, an offence under Section 32B(3) of the Securities Commission Act (SCA) 1993.
  2. Causing to be issued Energro Bhd's prospectus dated 24 April 2004 that contained information from which there is a material omission, an offence under Section 55(1)(b) SCA 1993.
  3. Causing to be issued Energro Bhd's prospectus dated 24 April 2004 that contained false information, an offence under Section 55(1)(a) SCA 1993.

The offences were committed in his capacity as a shadow director and advisor of Milan Auto Sdn Bhd in the Omega proposal.

Kenneth Chow pleaded guilty to the third charge and initially maintained his plea of not guilty to the first and second charges. He subsequently admitted to the first and second charges and the Sessions Court Judge, in sentencing for the third charge, took this into account.

The Sessions Court sentenced Kenneth Chow to one year imprisonment and a fine of RM500,000 (in default, one month imprisonment). Chow paid the fine in full. A stay of execution of the imprisonment sentence pending appeal was then granted, with the court also varying bail by adding more stringent conditions, which Chow has to abide by.

In relation to the first charge, the false information was with regards to the statement in the Omega proposal that "Milan Auto is the importer and distributor of Alfa Romeo cars pursuant to the Alfa Romeo Sales Concession Agreement dated 1 February 1990 between Milan Auto and Fiat Auto SpA of Italy". In actual fact, Milan Auto had by then received a notice of termination from Fiat Auto terminating the sales concession agreement.

The material omission referred to in the second charge was in relation to Fiat Auto's notice of termination of the sales concession agreement with Milan Auto.

Under the third charge, it was falsely stated in the Energro Bhd prospectus that the revenue for the financial year ended 31 December 2003 is RM82,336,000 and that the number of Alfa Romeo cars sold in the financial year ended 31 December 2003 is 558 cars. In actual fact, the revenue was inflated with the inclusion of RM64.6 million fictitious invoices from Singapore raised under Kenneth Chow's instructions. Furthermore, the accounting records of Milan Auto and Fiat Auto of Italy showed only a total of 100 Alfa Romeo cars sold in 2003.

Ng Chee Loong, principal of Messrs Ng and Associates, was jointly charged with Chow on 14 October 2004 for causing to be issued the Energro Berhad prospectus that contained false information. Ng maintains his not guilty plea and the case is pending trial in March 2006.

Advisors, listed corporations and their directors must exercise due diligence and adhere to financial reporting standards and disclosure requirements when submitting information to the SC.


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