PUTRAJAYA (July 6): A "freeze order" granted involving some RM169 million of businessman Datuk Ricky Wong Shee Kai, his mother Teh Sew Wan and their company Wong SK Holdings Sdn Bhd’s assets ought to be nullified as it was not consistent with the provisions within the Capital Markets and Services Act 2007 (CMSA), the defence told the appellate court on Monday.
Senior defence counsel Tan Sri Muhammad Shafee Abdullah, representing Wong — who is still at large — and Wong’s company, argued that there were no capital market offences in the fund-raising exercises at the heart of the inter-partes injunction linked to alleged securities fraud offences involving Bright Packaging Industry (BPI) Bhd.
"In the present circumstances, while it is noted that the capital markets were used to raise funds for BPI, using various capital market instruments, there was no manipulation of the fund-raising process," the senior lawyer said.
He added that even if fraud had occurred — a claim they staunchly deny — it had occurred after the funds were raised. He also noted that, to date, no complaints were made by BPI against the defendants.
Wong, his mother and their company are appealing an April 2022 inter-partes injunction granted barring them from dealing with assets worth RM169,223,500.00. The injunction is linked to the Securities Commission's (SC) civil case against the three. The main trial is on-going.
Among others, the SC claims that the defendants had devised a 'scheme' to defraud and had engaged in 'acts' which operated a fraud on BPI, which resulted in BPI losing about RM56 million.
The SC claims that monies were raised through three capital raising exercises between 2013 and 2015. The packaging company had raised about RM68 million and used the sum to pay their suppliers and to upgrade the factory lines.
However, the SC alleges that some RM56 million from the fund-raising was siphoned off to entities linked to the appellants.
Shafee also added that the freeze of assets amounting to three times the alleged gain is not mandatory, but a maximum permitted by law.
"What is permissive is not mandatory," he said.
Also appearing for Wong and the company was Muhammad Farhan Shafee. Senior counsel Tan Sri Cecil Abraham appeared for Wong's mother.
SC's counsel urges court not to take a narrow and literal interpretation of CMSA
Appearing for the SC, senior counsel Lim Chee Wee argued that a narrow and literal interpretation of the CMSA "would be antithetical" to the SC's regulatory function to curtail market misconduct.
"Surely it could not have been Parliament's intention to deprive the SC of the statutory remedies under the CMSA, which is meant to facilitate their regulatory function as a capital market watchdog. After all, what use is a watchdog if it is all bark and no bite?" he said.
Moreover, Lim added that the SC had presented arguments to show that there was a risk of dissipation through the appellant's conduct.
Among the evidence before the High Court previously was that Wong had personal knowledge of BPI's fundraising exercises before they took place, and that Wong was a beneficiary of the funds that had been siphoned away.
"The SC has also pleaded that the sufficient material and particulars of its claim against, and the fraud committed by, the appellants in its statement of claims. These particulars are also set out in specific and detailed manner.
"In particular, the SC has set out in detail the money trail of the proceeds raised from the BPI corporate exercises, and has exhibited the relevant documentary evidence showing the transfers, including cheques and bank statements," Lim said, leading the team of lawyers along with Kwan Will Sen.
Regarding the penalty of three times the alleged gain, Lim argued that, in granting the injunction, High Court judge Atan Mustaffa Yussof Ahmad had proper "judicial appreciation" for the evidence of the elaborate scheme perpetrated against BPI, and the appellants' role in it, and saw it fit to impose the penalty that he did.
Submissions before a three-member panel led by now apex court judge Datuk P Ravinthran continues on Tuesday.
Also on the panel are COA judges Datuk Choo Kah Sing and Datuk Leonard David Shim.