Shock as head of Malaysia's financial watchdog quits

Securities Commission (SC) chief Syed Zaid Albar resigned yesterday from Malaysia's financial markets regulator amid controversy over the decision to drop criminal charges against executives of a politically-linked oil and gas firm.

Both the SC and the Finance Ministry confirmed Datuk Syed Zaid's exit just six months into a three-year renewal of the corporate lawyer's tenure.

The Attorney-General's Chambers (AGC) had initially agreed to charge Serba Dinamik's chief executive Mohd Abdul Karim Abdullah, executive director Syed Nazim Faisal, chief financial officer Azhan Azmi and vice-president of accounts and finance Hafiz Othman on the SC's recommendation last December. All were charged with submitting false information on the company's financial data.

But, in a turnaround a fortnight ago, the AGC decided to accept representations made by the firm, Serba Dinamik, and its officials.

The SC then fined Serba Dinamik and the four officials the maximum amount of RM3 million (S$954,000) each for allegedly misrepresenting RM6 billion in revenue. The amount represented the biggest corporate fraud case involving a firm listed on Malaysia's stock exchange.

The decision not to prosecute sparked concern in corporate circles, where Serba Dinamik is largely seen as having close links to politicians in Prime Minister Ismail Sabri Yaakob's government.

"It gives rise to the perception of double-standard practices being accorded to certain individuals," Institutional Investors Council of Malaysia's adviser Lya Rahman was quoted as saying by The Edge.

Mr Syed Zaid said the regulator's "integrity, professionalism and dedication were tested and proven many times" since he was appointed in 2018.

The outgoing executive chairman welcomed his successor and former deputy finance minister Awang Adek Hussin in leading "an institution that stands resolutely strong".

Official sources told The Straits Times that Mr Syed Zaid is not the only senior official "wanting to leave SC after this debacle".

Former finance minister Lim Guan Eng "expressed shock at both the sudden resignation" of Mr Syed Zaid and "his immediate replacement with Umno politician Awang Adek Hussin" who was once also a Member of Parliament.

The chairman of the largest opposition outfit Democratic Action Party demanded that "both the Prime Minister and the Attorney-General… give full explanations on Syed Zaid's shock resignation".

"The government must act swiftly to reassure investor confidence that Malaysia's capital market is run not for the benefit of vested interests… but professionally, independently, competently with full adherence to transparency and respect for rule of law free from any political interference," he added.

The concerns over Serba Dinamik's financials were first raised by its external auditor KPMG in May 2021, in relation to more than RM4 billion in transactions involving phantom companies.

However, the firm ignored a court order to reveal a subsequent factual finding update (FFU), leading Bursa Malaysia to sue it for contempt of court on April 14.

Trading in Serba Dinamik has been suspended since last October due to its refusal to hand over the FFU.