Press Statement: POSSIBLE ILLEGAL INSIDER TRADING INVOLVING BOUSTEAD GROUP

 

PRESS STATEMENT DATED 5 MAY 2020

SECURITIES COMMISSION SHOULD PROBE POSSIBLE ILLEGAL INSIDER TRADING INVOLVING BOUSTEAD GROUP

 Government-Linked Companies (GLCs) appear to be undergoing another major shake-up at the top since the formation of the unelected government of Perikatan Nasional in February 2020. 

The Center to Combat Corruption & Cronyism (C4) has expressed concern together with many other stakeholders that the string of new political appointments in GLCs for the past few weeks have seen raw unfiltered politics at play, placing some of these companies in a further injurious light. 

 

MAJOR SHAKE-UP AT THE TOP – BOUSTEAD HOLDINGS BERHAD

The appointment of Datuk Seri Mohamed Khaled Nordin, UMNO vice-president, to chair a GLC during the Covid-19 pandemic has raised eyebrows as the latter’s appointment is rumoured to prevent him from questioning the unelected Perikatan Nasional government. 

Former Johor Menteri Besar Khaled has been appointed as the new non-independent and non-executive chairman of Boustead Holdings Berhad (BHB), effective 1 May 2020. BHB is a leading GLC in which Lembaga Tabung Angkatan Tentera (LTAT), the Malaysian Armed Forces Pension Fund, is a majority shareholder. BHB is currently under the purview of the Defence Ministry (MinDef), which is headed by Khaled’s party colleague, Dato’ Sri Ismail Sabri Yaakob.

Prior to Khaled’s appointment, Focus Malaysia has reported on April 15 that one of BHB’s subsidiary, Boustead Heavy Industries Corp Bhd (BHIC)’s shares have been in free fall since April 13. According to the National Patriots Association:

“A certain party sold BHIC shares at lower prices when there were already bids from others to buy much higher. This is illogical unless someone is desperately trying to press down the stock price with an ulterior motive to gain a majority stake.” 

And then there was Urusharta Jamaah Sdn Bhd (UJSB)’s disposal of 1.2 million BHIC shares in the open market on Apr 22. UJSB, the vehicle set up under the Ministry of Finance to take over the underperforming assets (including land) of Lembaga Tabung Haji, which has been selling a number of its equity holdings in recent weeks amid bearish sentiment, stock exchange filings shows. 

UJSB’s Chief Executive Officer, Izad Sallehuddin, was quoted as saying by TheStar on May 3 that UJSB is taking advantage of opportunities offered by the recent stock market weakness and mispricing to buy into better quality stocks at attractive valuations.

GLCs, politicians and corporate insiders who are involved in the company’s discussions and review of material, non-public information about the impact of Covid-19 on the company should not trade on such information nor share such information with third-parties until such information is disclosed to the public. Thus, the sudden dumping of shares by UJSB warrants investigation by Bursa Malaysia Berhad (Bursa) to prevent any lawmakers and/or corporate insiders from taking advantage of this privileged access to information and profiting during this pandemic.

 

MAJOR SHAKE-UP AT THE TOP – BURSA MALAYSIA BERHAD

The sudden removal of Datuk Shireen Ann Zaharah Muhiudeen as Bursa chairman on April 16 over governance issues, stung industry players. Shireen who has been very vocal on transparency in corporate reporting and anti-corruption agenda, was asked to retire on April 30. She was replaced by Tan Sri Abdul Wahid Omar.

Wahid Omar, the former Group Chairman of Permodalan Nasional Berhad, was also a member of civil servants’ pension fund Kumpulan Wang Persaraan Diperbadankan (KWAP), as early as 2010 to 2014. During his time at the helm, he and his investment panel committees, approved RM4 billion in loans to a former 1Malaysia Development Bhd (1MDB) subsidiary SRC International Sdn Bhd amid alleged pressure by the then Prime Minister Najib Razak. Subsequently, he was appointed as a Senator and Minister in the Prime Minister’s Department in charge of Economic Planning, serving Najib Razak from 2013 to 2016. 

The appointment of such a controversial personality, tarred with the SRC scandal as court testimonials have revealed,  to suddenly lead the reputable Bursa is inconceivable and an erosion to the credibility, transparency, integrity and accountability of our Malaysia’s listed stock exchange operator.

 

DEMANDS

Lawmakers and corporate insiders need to be aware that their transactions in the company’s securities are going to be monitored closely by Bursa and Securities Commission Malaysia throughout the Covid-19 pandemic. 

Given this alarming trend of appointing various politicians and tainted corporate insiders to lead GLCs and regulatory bodies, C4 urges the Securities Commission Malaysia to investigate impartially and as a ‘matter of urgency’ the possibility of flagrant case of illegal insider trading involving BHIC’s shares. If any perpetrators have used inside information to make millions off a military personnel fund, then it is a blatant corruption case that cannot go unpunished.

 

Released by:

Cynthia Gabriel (Ms.), Founding Director, C4 Center

Lalitha Kunaratnam (Ms.), Senior Researcher, C4 Center

 

For inquiries, please contact 017-361 6473

 

References:

  1. https://www.malaysiakini.com/news/523494

  2. https://focusmalaysia.my/mainstream/something-sinister-is-going-on-patriot-says-over-bhics-share-price/

  3. https://focusmalaysia.my/mainstream/patriot-probe-illogical-pressing-down-bhic/

  4. https://www.thestar.com.my/business/business-news/2020/05/02/urusharta-jamaah-rebalances-portfolio

  5. https://www.theedgemarkets.com/article/sc-mof-decided-bursa-chairman-has-go-over-governance-issues

  6. https://en.wikipedia.org/wiki/Abdul_Wahid_Omar

  7. https://www.kwap.gov.my/EN/UsefulInformation/Publication/Annual%20Reports/KWAP%20Annual%20Report%202010.pdf

  8. https://www.kwap.gov.my/EN/UsefulInformation/Publication/Annual%20Reports/KWAP%20Annual%20Report%202014.pdf

  9. https://web.archive.org/web/20130607100654/http://thestar.com.my/news/story.asp?file=%2F2013%2F5%2F15%2Fnation%2F20130515171254&sec=nation