KUALA LUMPUR (Feb 17): After about 10 years since the trial commenced in 2010, the defence for the accounting scandal involving Transmile Group Bhd founder and former chief executive officer Gan Boon Aun closed its case last Friday.

After finishing the re-examination of Gan as the defence witness last Friday, lead defence counsel Datuk Tan Hock Chuan indicated that the defence case was done, and that the trial may proceed to written submissions.

Tan noted that the defence had initially intended to call up former transport minister Tun Dr Ling Liong Sik, who was also executive chairman of Transmile, as a defence witness. However, according to Tan, Ling was not able to attend court due to undisclosed reasons.

Ling joined Transmile in April 2004, and vacated the chairman’s post two days before the group’s annual general meeting on Sept 5, 2007. The scandal broke out in April 2007.

Following the closing of the defence case, Sessions Court judge Hasbullah Adam fixed March 23 for the court to determine the date for written submissions before delivering his decision.

Deputy Public Prosecutor Mohd Hafiz Mohd Yusof last Friday wrapped up his cross-examination of Gan. Hafiz alleged that Gan had resigned from his position in August 2007 because he knew that the company was initiating a domestic inquiry against him over the accounting irregularities. Gan, however, disagreed with the claim.

At the time he resigned, Gan claimed he was not aware of the findings made by external auditor Moores Rowland Risk Management during a special audit on Transmile. The special audit had uncovered large discrepancies in the air cargo firm’s receivables.

From the findings of the special audit, Moores Rowland concluded the earnings for the financial year ended Dec 31, 2005 (FY05) and FY06 were grossly overstated.

According to the audit, Transmile suffered losses of RM126.3 million instead of a RM157.5 million profit in FY06 as reported. In FY05, it chalked up losses totalling RM369.6 million instead of an RM84.4 million profit that was reported.

To recap, in July 2007, Gan, former chief financial officer Lo Chok Ping and former executive director Khiudin Mohamed were charged with abetting the company in making a misleading statement to Bursa Malaysia in its quarterly report. The trio claimed trial.

In an interesting twist, the Securities Commission Malaysia withdrew the charge against Lo in May 2008 after he paid a compound of RM700,000, while Khiudin was acquitted of the charge in 2016.

In Gan’s case, 42 prosecution witnesses had been called. Following that, the Sessions Court judge ruled there was a prima facie case and the defence was called on March 16, 2011. Defence then commenced on July 27, 2018.

Gan’s primary charge is for committing an offence under Section 86(b) read together with Section 122C(c) of the Securities Industry Act 1983 (Act 280) and punishable under Section 88B of the same Act. The offence is for abetting Transmile in making a statement that is misleading in its “quarterly report on unaudited consolidated results for FY06”.

However, he was called for defence for an alternative charge for committing an offence under Section 122B(a)(bb) of the Securities Industry Act 1983 (Act 280) when he, with intent to deceive, furnished a misleading statement to Bursa with regard to the financial statements of the same year.

If convicted, Gan is liable to a fine of not less than RM1 million and up to 10 years’ imprisonment.