The Securities Commission will conduct a swift probe into air cargo carrier Transmile's accounting woes, the watchdog's chairman vowed today

Transmile lodged a police report on Tuesday over irregularities that include false statements of revenue and asset purchases.

Transmile, whose shareholders include reclusive billionaire Robert Kuok, has said the overstatement of revenue in its financial records goes back to 2004 and that subsequent pretax profit will have to be adjusted downwards.

"Investigations are going on. We will try to complete as soon as possible and appropriate action will be taken at the end of the investigations," Zarinah Anwar, the Securities Commission chairperson, told reporters.

Zarinah defended the watchdog's ability to track potential market irregularities and said incidents occur despite tough enforcement.

"It happens in the United States. It happens everywhere," she said. "We have a very robust legal regulatory corporate governance framework."

She said that what is important is that when problems arise, "we are ready to move in very swiftly."

Overstated revenue

According to a final report from Moores Rowland Risk Management, which was commissioned to carry out an audit, Transmile's revenue from 2004 to 2006 was overstated by RM622 million, the company said Monday.

The overstated revenue came from invoices issued for "purported services" to about 20 companies, Transmile said.

The company will have to restate its financial statements for the three years if full provisions and adjustments have to be made, wiping out pretax profits totalling RM327 million for 2006 and 2005, Transmile said.

It will instead have to report pretax losses of RM207 million for the two years while the 2004 pretax profit of RM87 million will be reduced to eight million ringgit, it said.

Zarinah reminded investors to be alert and urged ethical behaviour by directors and others involved in the accounting process.

"The market cannot depend only on the regulators to exercise regulatory discipline. It is very, very important for all market players ... to ensure that transgressions of this nature are eliminated."

The shareholders

Transmile's chief executive officer, Gan Boon Aun, has voluntarily relinquished all his executive functions, the company said Tuesday.

Transmile's accounting woes came to light on May 7 when it announced it failed to meet the deadline to submit audited financial statements for 2006.

Along with Robert Kuok, a Hong Kong-based Malaysian, the firm's shareholders include investment banks JP Morgan and Goldman Sachs, the Singapore government and national postal company Pos Malaysia, whose main shareholder is state investment arm Khazanah Nasional.

In afternoon trade, Transmile shares were 0.79 ringgit lower at 4.96, down from 13.00 ringgit in early May.