In the GUIDELINES ON ISSUANCE OF CORPORATE BONDS AND SUKUK TO RETAIL INVESTORS first issued by the Securities Commission on 15 June 2015 and revised on 28 November 2024, Chapter 1 to 14 clearly sets out the set out the requirements for an issue of, offer for subscription or purchase of, or invitation to subscribe for or purchase corporate bonds or sukuk to retail investors.
The GUIDELINES ON THE REGISTRATION AND CONDUCT OF CAPITAL MARKET SERVICES PROVIDERS that was 1st Issued on 19 October 2018 regulates any entity providing trustee services for a unit trust scheme (UTS) and Prescribed Investment Scheme, private retirement scheme (PRS), corporate bond, sukuk or any other products as may be specified by the Securities Commission Malaysia.
In a recent case where it was reported that the Malaysian Anti-Corruption Commission (MACC) has seized luxury assets worth RM32 million from a Tan Sri who is under investigation for allegedly making false claims and misusing loan bonds related to a highway construction project in the Klang Valley, where are all the Responsible Parties and Advisors and Trustees for the Sukuk Funds that was issued and were misused by the Tan Sri?
If the issuer of a Sukuk bond submits false claims, it could lead to serious consequences, including legal penalties and reputational damage.
The issuer's actions could also harm investors if they are not adequately informed about the true state of the Sukuk.
The Securities Commission Malaysia (SC) has guidelines in place to ensure that issuers provide accurate and complete information in their Sukuk offerings.
In the Chapter on UTILISATION OF PROCEEDS of the Guidelines on Issuance of Corporate Bonds and Sukuk, it clearly states that an issuer must ensure that proceeds from the approved sukuk are utilised for Shariah compliant purposes only and in accordance with the purposes disclosed to the SC.
Where the proceeds are utilised for a project which will generate cash flow for payments to investors, the issuer must ensure that the transaction documents relating to the sukuk include the relevant parameters, conditions, supporting documents and certificates to enable the sukuk trustee or facility agent, where applicable, to manage the release of the proceeds to the issuer.
Surely the Tan Sri cannot make a false claim on his own without involving many parties including the sub-contractors and advisors in order to make the fraud occur.
In the entire chain of responsibility from the preparation of the claim, to the claim being certified and approved and submitted, to the claims being approved and paid out, it is clear that everyone along the entire process has knowledge of the information, acts in deliberate ignorance of the truth or falsity of the information, acts in reckless disregard of the truth or falsity of the information.
While it's true that consultants and advisors don't face the same level of scrutiny, they can be held liable for assisting in the preparation and submission of false or misleading claims.
They are not as naïve as it perceived to be.
As PMX said recently, major audit firms have, at times, been complicit in financial scandals in this country too.
Where is the Securities Commission and their vaunted and all powerful supervisory `hawks’ in this particular highway project?
Where are all the enforcement authorities and regulators when they are most needed?
Together, all of the enforcement authorities and regulators can bring civil and criminal aspects together charging the issuer for false claims under several statutes and every available statutory possibility at once, thereby elevating the level of potential sanctions.
In this way, the government’s false claims will possibly encourage the Tan Sri and all those who assisted and cohort with him reach a prompt settlement with the authorities.
Were all these undertaken?
Do not let this case ends up like 1MDB where only Najib was charged and served time while all those who participated with him were left off with no criminal actions filed against them and now gets to enjoy the spoils from their role in the 1MDB theft.
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