KUALA LUMPUR (Jan 23): The High Court has acquitted former Malaysian Merchant Marine Bhd (MMM) executive deputy chairman Datuk Ramesh Rajaratnam of his long-standing criminal conviction for insider trading, thus setting aside his sentence of five years’ jail and a RM3 million fine.
On Friday, Court of Appeal (COA) judge Datuk K Muniandy, who was sitting in the High Court for this case, allowed Ramesh’s appeal and acquitted Ramesh based on his findings that Ramesh’s criminal liability, under the Capital Markets and Services Act 2007 (CMSA), must be assessed on the totality of evidence, not on isolated circumstances, and found that the evidence did not support a guilty verdict.
Ramesh was first charged at the Kuala Lumpur Sessions Court on April 29, 2015, with three counts of insider trading under Section 188(2)(a) of the CMSA.
Following a full trial, he was found guilty and sentenced to five years’ imprisonment and a fine of RM3 million (with three years’ imprisonment if he defaults) for each charge. Ramesh subsequently appealed to the High Court and was granted a stay of execution pending the appeal.
On May 20, 2021, High Court judge Datuk Azhar Abdul Hamid set aside Ramesh’s conviction and sentence on all three charges, on the grounds that the Sessions Court judge had committed judicial copying, without hearing the merits of the case.
However, following an appeal at the COA, the COA ruled that the High Court had erred in acquitting Ramesh without considering the case’s merits.
The COA, in setting aside the High Court’s decision to acquit Ramesh only on the first charge, also reinstated the earlier conviction and sentence imposed by the Sessions Court and sent the appeal back to the High Court for the appeal of the first charge to be heard again.
Under the first charge, Ramesh allegedly sold five million MMM shares in January 2010, while possessing inside information regarding a proposed downgrade by Malaysian Rating Corp Bhd of its credit rating on MMM’s RM120 million Al-Bai’ Bithaman Ajil Islamic Debt Securities from A-ID to BB+ID.
In his decision on Friday, Muniandy said that the case must be assessed on its full chronology of events under the CMSA and found that Ramesh had wanted to dispose of the shares as early as October 2009, before the alleged inside information existed.
“The narrative of this case does not begin with the receipt of inside information, but rather with the appellant’s public transparency. On Oct 23, 2009, nearly a month before the information even existed, the appellant made a formal public declaration,” he said.
The judge also added that the sale of the shares in January 2010 was not triggered by inside information, but followed a pre-determined plan or a “pre-announced corporate strategy”.
Muniandy held that by December 2009, the market was already aware of MMM’s financial distress, including possible bond suspensions.
The court noted that Ramesh had suffered a personal loss and that the proceeds of the share sale was used for company expenses.
“The proceeds (of the sale of the shares) were immediately channelled back into the company to cover staff wages, EPF (Employees Provident Fund) payments, and operational costs,” he said.
“The appellant realised a personal loss of RM1.48 million,”
He said that he is satisfied that the purpose of the trade was not to secure a “gain or avoid a loss” but to “ensure corporate survival”.
Muniandy added that when there is doubt in cases such as these, that doubt must be resolved in favour of the accused.
“In a criminal trial where two versions of the truth exist, the one favouring the innocence of the accused must prevail,” he said.
He then set aside the conviction and sentence, and Ramesh, who was present at court, was discharged.
The Security Commission Malaysia was represented by counsels Hashley Tajudin, Low Wen Zhen, and Daniel Ariff Tung. While A Srimurugan from Messrs Srimurugan & Co and Miguel Sequerah from Preakas & Partners appeared for Ramesh on Friday.