PUTRAJAYA (July 10): A three-member Court of Appeal bench on Monday (July 10) set aside the two-year jail sentence and RM2.5 million fine imposed by the High Court against former Transmile Group Bhd chief executive officer and executive director Gan Boon Aun.

Following that, the bench led by judge Datuk Hadhariah Syed Ismail restored the order by the Sessions Court in giving Gan a one-day’s jail sentence and RM2.5 million.

This follows the appellate bench unanimously ruling to allow an appeal by Gan’s daughter, who filed the appeal that the Securities Commission Malaysia's (SC) non-compliance with handing over its notice of appeal and notice of hearing directly to Gan and the hearing of the SC’s appeal despite his absence were wrong.

“There was no merit in the SC’s argument over the daughter’s locus standi (legal standing) in initiating the appeal. There was non-compliance by the High Court in proceeding with the appeal when there was no notice of appeal and notice of hearing to Gan, and proceeding in hearing the SC’s appeal and enhancing the sentence requires our interference.”

“For this reason, we declare the High Court decision on the sentence as null and void. We are allowing the appeal by the appellant (Gan’s daughter), and restoring the order of the Sessions Court,” Hadhariah said.

Sitting with her in making the unanimous decision were Datuk M Gunalan and Datuk Azman Abdullah.

Gan left the country before the hearing of the appeal to set aside his conviction and sentence, and the cross-appeal by the SC over the sentence. 

He had already served his one day's jail sentence and paid the fine, and the appellate court was the final venue for an appeal, as the case originated in the Sessions Court.

On Jan 25 last year, the High Court allowed the SC’s appeal and enhanced Gan’s one day’s jail sentence to 24 months' jail, after he was convicted of furnishing a misleading statement, with intent to deceive, relating to Transmile’s revenue in the company’s quarterly report on unaudited consolidated results for the financial year ended Dec 31, 2006.

According to the SC, the misleading statement on the revenue amount comprised over RM333 million of fictitious sales. Gan’s conviction was under Section 122B, read together with Section 122(1), of the Securities Industry Act 1983.

Gan’s daughter was represented by Datuk V Sithambaram and Guok Ngek Seong.

Earlier, deputy public prosecutor (DPP) Mohd Hafiz Mohd Yusoff objected to the hearing of the appeal, questioning the daughter's locus standi or legal standing in having the appeal heard for Gan.

Mohd Hafiz said should the court allow the daughter’s appeal, it would open the floodgates, as it should have been Gan who filed the appeal to the appellate court.

“There was an incurable defect in the notice of appeal, as Gan’s whereabouts are unknown, and two warrants of arrests were issued against him.”

“The express instructions in the appeal must come from Gan alone and not the daughter,” he said.

If Gan’s appeal is to be heard, the DPP said, he should come back and have the warrants set aside. "His daughter’s appeal on behalf of her father is an affront to the administration of justice, as now the accused or convicted person may not be present in the court, but file an appeal through a family member,” he said.

Mohd Hafiz further argued that the appellate court should consider the notice of appeal served on Gan’s solicitors as proper service of court documents to the former CEO.

However, the SC acknowledged that they were unable to serve the notice of hearing, but the High Court acknowledged that there were several publications made by the media.

The SC initially filed the notice of appeal in the High Court over the one-day jail sentence sometime in late August 2020, and Gan filed his notice through his solicitors.

However, two days before the second case management in the High Court, Gan was said to have left the country. Sometime in July 2021, his solicitor from Messrs Tan Hock Chuan discharged himself from representing him.

Gan’s appeal against his conviction and sentence was struck out by the High Court in October 2021, and the SC’s appeal was heard before judge Mohamed Zaini Mazlan (now a Court of Appeal judge), who delivered the January 2022 decision to increase the jail sentence.

Sithambaram, meanwhile, said Gan’s daughter should be allowed to appear, as anyone could appear on behalf of a family member, and her appearance was due to questions surrounding the proper procedure in the service of documents, namely the notice of appeal and notice of hearing.

The senior counsel said the court should intervene in this matter as if the serving of documents to the lawyer is allowed, and not directly to the respondent (Gan).

He further cited Section 314(1) of the Criminal Procedure Code, which states: "If in the hearing of an appeal, the respondent is not present, and the court is not satisfied that the notice of appeal was duly served on him, then the court shall not make any order in the matter of appeal adverse to or to prejudice the respondent, but shall adjourn the hearing of the appeal to a future date for his appearance."

Sithambaram said that under the section, it is stipulated that the notice of appeal had to be duly served on him, and nowhere does it say the solicitors be served.

Furthermore, he added that it should be considered wrong for the High Court to proceed with hearing the SC’s appeal, when there were questions surrounding the notice of appeal, and to enhance the sentence more.

“There is no dispute that the notice of hearing was not served on Gan,” he said, adding that a family member should be allowed to intervene in this matter in terms of justice, as this would help proper development of the law.

“Here, the order of the High Court [to enhance the sentence] is considered illegal,” the counsel added.

Transmile was caught in an accounting scandal in 2007, after auditors concluded that the air cargo service provider's results for the financial years ended December 2005 and 2006 were grossly overstated.

The company further suffered losses of RM126.3 million instead of making a profit of RM157.5 million in 2006. In 2005, it chalked up losses totalling RM369.6 million instead of the RM84.4 million profit that was reported.

It was categorised as a Practice Note 17 company in 2010, and was eventually suspended and delisted from the local bourse in 2011.

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