By Mak Yuen Teen
In December last year and January this year, I wrote about the incorrect disclosures made by Low Beng Tin when he was appointed as a director at Datapulse Technology in December 2017, at Fuji Offset Plates Manufacturing in May 2017 and at Lian Beng Group in July 2015. These incorrect disclosures have to do with regulatory actions/petition for winding up or dissolution for companies where Mr Low was a director.
The companies subsequently issued a “clarification” or “corrigendum” attributing the incorrect disclosures to “inadvertent omissions”. Datapulse had to issue two separate announcements, after failing to correct an error in the first “clarification” announcement.
Directors should be responsible for ensuring that information provided when they are appointed is accurate. I had pressed about regulatory action for such incorrect disclosures, but nothing was evidently done, at least publicly. In any case, private warning letters or reprimands would have little use in setting the tone for the rest of the market. The regulator has also not publicly issued any statement that such incorrect disclosures are unacceptable and may be subject to regulatory action.
It is therefore hardly surprising that further “inadvertent omissions” similar to those in the abovementioned companies have since emerged.
On 25 June 2018, SMJ International issued a corrigendum to an earlier announcement on 4 May 2018. This had to do with the appointment of Mr Ng Fook Ai Victor as independent director, chairman of the board and chairman of the nominating committee. There were “inadvertent omissions” relating to his past directorships in several companies here and in Malaysia. These include a special audit for a company listed here, a public reprimand by Bursa Malaysia against a Malaysian listed company, and financial penalties imposed by the Malaysia Competition Commission against the Malaysian company and its subsidiary. The continuing sponsor at that time was Hong Leong Finance, which was replaced by SAC Capital on 3 September 2018. From the announcement, the role of the incumbent and incoming continuing sponsors in the discovery of the “inadvertent omissions” is unclear – that is, whether the omission was discovered by the incoming sponsor doing “onboarding due diligence” as was the case of Lifebrandz below, or it was discovered by the incumbent sponsor in the course of discharging its responsibilities.
At Lifebrandz, the company announced the appointment of Mr Saito Hiroyuki as executive chairman and CEO on 5 May 2017. More than 16 months later, on 14 September 2018, the company issued a corrigendum. This followed the appointment of a new sponsor, SAC Capital, on 31 August 2018. The announcement said that SAC Capital had brought to the attention of Mr Saito during the onboarding due diligence process that a disclosure should have been made when he was appointed. According to the corrigendum: “On 18 September 2016, Mr Saito was being referred to the Commercial Affairs Department of the Singapore Police Force (“CAD”) for failure to declare movement of cash exceeding the prescribed amount of S$20,000 under Section 48C of the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act, Chapter 65A of Singapore (the “Act”) upon his arrival in Singapore airport from Japan. Mr Saito represented to the CAD that he did not intend to contravene any laws in Singapore and that he was not aware of the obligation to declare cash valued in excess of S$20,000. He also represented to the CAD that the cash was intended to be used for legitimate business purposes. He was fined S$20,000 under Section 48C of the Act on 19 June 2017. The full amount of cash, which was brought in by Mr Saito, has been returned to him.” Mr Saito said the disclosure was inadvertently omitted. It seems that the previous sponsor, RHT Capital, either was not aware of the omission or had advised the company that disclosure was not necessary.
It would appear that “inadvertent omissions” are now considered an acceptable excuse for failing to accurately disclose information under our disclosure-based regime since there is no evidence of any regulatory action. Regulatory actions must be transparent and consistent. Once no regulatory action is taken for one case, any regulatory action taken for similar cases will be perceived as inconsistent and unfair. Regulators have remained silent on such omissions. In the case of Catalist companies, do continuing sponsors have any responsibility at all in ensuring that accurate disclosures are made?
The apparent lack of action taken by regulators for “inadvertent omissions” adds to the continuing degeneration of our so-called disclosure-based regime.
