Tuesday 06 Jun 2023
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This article first appeared in The Edge Malaysia Weekly on January 16, 2023 - January 22, 2023

Minority shareholders who were hopeful that Serba Dinamik Holdings Bhd would turn around as its senior management had only misstated the annual revenue for one financial year, must be disappointed now.

Last Tuesday, the High Court granted an order for six financial institutions to wind up Serba Dinamik and its three subsidiaries over debts totalling about RM5 billion. In short, the company will be liquidated.

Serba Dinamik will, however, appeal against the court’s decision.

On Thursday, Serba Dinamik released its long delayed annual report for the financial year ended June 30, 2022.

The annual report shows that at the group level, there were unverified property, plant and equipment of RM1.99 billion, unverified inventory of RM1.59 billion, unverified trade and other receivables of RM1.59 billion, unverified trade and other payables of RM639.56 million, unverified loans and borrowings of RM3.65 billion, unverified revenue of RM1.35 billion and unverified cost of contract with customers of RM1.61 billion.

Its auditor Nexia SSY PLT stated that it was unable to conclude that the carrying amounts of the above items “are fairly stated in the financial statements”.

The total sum of the unverified items is a whopping RM11.08 billion.

To recap, last year, four of the company’s executives were fined RM3 million each by the Securities Commission Malaysia for submitting a false statement involving revenue of RM6.01 billion for its financial period ended Dec 31, 2020, which was red-flagged by the company’s then external auditor, KPMG.

The four executives are CEO and group managing director Datuk Mohd Abdul Karim Abdullah, executive director Datuk Syed Nazim Syed Faisal, chief financial officer Azhan Azmi, and vice-president of accounts and finance Muhammad Hafiz Othman.

Some questioned why a harsher punishment was not meted out.

The total amount of unverified items is nearly double the annual revenue of RM6.01 billion in the false statement.

Critics who believed that there was more to the audit issues at Serba Dinamik than meets the eye have been proven right, to say the least.

Serba Dinamik’s shares resumed trading last Friday but will be suspended again on Wednesday (Jan 18) because of the court’s winding-up petition.

Is this fair to the minorities? Do these shareholders, who have invested their hard-earned savings, have themselves to blame for investing in Serba Dinamik? It is worth noting that the Employees Provident Fund, Kumpulan Wang Persaraan Diperbadankan and the State Financial Secretary of Sarawak are among the company’s shareholders.

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