I refer to the malaysiakini report Liong Sik must explain Transmile fraud.
I was shocked over this report on Transmile Corporation, a company listed on the main board of our stock exchange. According to the report:
'A recent special audit carried out by Moores Rowland Risk Management Sdn. Bhd, showed that Transmile made pre-tax losses of RM126 million and RM77 million for 2006 and 2005, respectively, instead of pre-tax profits of RM207 million and RM120 million as originally reported a total of RM530 million in overstatement.'
Transmile is 15.3% owned by Pos Malaysia, which is majority-owned by Khazanah Nasional Bhd. With the news, the share price of Transmile dropped from RM8.90 to Rm6.00, a 32% decrease.
Since this is a listed company which has many minority shareholders, imagine the amount of money lost by all these innocent shareholders whose only fault is in believing the accounts of Transmile, thinking that it is a great company with potential and investing in it.
How can this come about, an overstatement of RM530 million? A whopping RM530 million! I am really baffled by this figure. I do not believe that no one knows about this inside the company. After all, this is not RM1 but an astronomical sum.
What this will lead to will be a loss of confidence in our public companies among retail investors. The first question that comes to any investor's mind will be: How many more 'Transmiles' are there?
Will anyone still have trust in the accounts of the listed companies? What is there to trust anymore? If the investors have lost their trust , what will they do? They will sell. The market will go down. More investors will be affected. A vicious cycle will occur. A downward spiral will occur. This loss of confidence can have a bad effect on the economy.
Remember Enron? For the benefit of those who have forgotten Enron, I quote Wikipedia:
'Enron was one of the world's leading electricity, natural gas, pulp and paper, and communications companies, with claimed revenues of US$111 billion in 2000.
Fortune named Enron 'America's Most Innovative Company' for six consecutive years. It achieved infamy at the end of 2001, when it was revealed that its reported financial condition was sustained mostly by institutionalised, systematic, and creatively planned accounting fraud. Enron has since become a popular symbol of willful corporate fraud and corruption.'
Is the Transmile case the same as Enron's? Was there intentional fraud? If it is a fraud, isn't this type of fraud more dangerous than stealing?
In order to gain back the confidence of the investing public, a thorough investigation must be carried out by an independent body. There must be transparency and accountability in this case. Those who are responsible for this debacle must be severely punished, for this sort of fraud is actually a heinous crime affecting thousands of people as well as the economy and the good name of the whole country.