Bursa Malaysia Securities Publicly Reprimands Patimas Computers Berhad And Fines 4 Executive Directors A Total Of Rm1,986,200

Bursa Malaysia Securities Berhad (635998-W) (Bursa Malaysia Securities) has publicly reprimanded Patimas Computers Berhad (PATIMAS) and its 4 executive directors at the material time for breaching the Bursa Malaysia Securities Main Market Listing Requirements (Main LR).  In addition, the 4 executive directors of PATIMAS were fined a total of RM1,986,200.

PATIMAS was publicly reprimanded for breaching:-

(1)            Paragraph 9.23 of the Main LR as the Company failed to announce its annual audited accounts and annual report for the 15-month financial period ended 31 March 2012 (AAA 2012 and AR 2012) on or before 31 July 2012 and 30 September 2012 respectively.  PATIMAS only announced the AAA 2012 and AR 2012 on 1 November 2012 and 9 November 2012 respectively;

(2)            Paragraph 9.22(1) of the Main LR as the Company failed to announce its quarterly report for the financial period ended 30 June 2012 (QR 1/2013) on or before 31 August 2012. PATIMAS only announced the QR 1/2013 on 1 November 2012; and

(3)            Paragraph 9.16(1)(a) of the Main LR in respect of:-

• the Company’s announcement dated 29 May 2012 on the unaudited quarterly report for the financial period ended 31 March 2012 (QR 31 March 2012) which was inaccurate as the Company failed to take into account the adjustments as stated in the Company’s announcement dated 1 November 2012; and
• the Company’s announcement dated 29 April 2011 on its audited accounts for the financial year ended 31 December 2010 (AAA 2010) which was subsequently adjusted / restated in the AAA 2012.

Notwithstanding that PATIMAS had been de-listed, the breaches were committed while the Company was listed on the Official List of Bursa Securities.

In addition, the following enforcement actions were taken against 4 executive directors of PATIMAS at the material time in respect of the breach of paragraph 16.13(b) of the Main LR for permitting knowingly, or where they had reasonable means of obtaining such knowledge, PATIMAS to commit the breaches of paragraphs 9.16(1)(a), 9.22(1) and 9.23 of the Main LR:-

The finding of breach and imposition of the above penalties on PATIMAS and the 4 executive directors at the material time were made pursuant to paragraph 16.19 of the Main LR upon completion of due process and after taking into consideration all facts and circumstances of the matter including the materiality of the breaches, impact of the breaches to the Company and shareholders and the role, responsibilities, conduct and involvement of the directors.

Bursa Malaysia Securities views the contraventions seriously as  timely and accurate submission of financial statements are fundamental obligations of companies listed on the Official List of Bursa Securities and are of paramount importance in ensuring a fair and orderly market for securities that are traded on Bursa Securities and crucial to aid informed investment decision.

BACKGROUND

(I)     PUBLIC REPRIMAND ON PATIMAS

PATIMAS had committed the following breaches:-

The breaches were essentially caused by / arose from the lack of appropriate audit evidence (which included supporting information / explanation and documentation) to enable the external auditors to verify the veracity of certain irregular sale and purchase transactions undertaken by PATIMAS Group with a group of customers / suppliers.  The irregularity of the transactions were also confirmed in the subsequent special audit report finalised in September 2012 and the investigative audit report announced by the Company on 14 May 2013.

These transactions represented 48% and 53% of the total sales and cost of sales respectively in the financial period ended 31 March 2012.  In addition, the amount owing from the group of customers / suppliers arising from the transactions contributed 63% of the total trade receivables of PATIMAS Group as at 31 March 2012.

Upon announcement of the AAA 2012 on 1 November 2012, PATIMAS had triggered the prescribed criteria under paragraphs 2.1(a) and (d) of Practice Note 17 in view of the negative shareholders’ fund of RM19.05 million as at 31 March 2012 and the disclaimer opinion of the external auditors in the AAA 2012.

(II)         PUBLIC REPRIMAND AND A TOTAL FINES OF RM1,986,200 IMPOSED ON 4 EXECUTIVE DIRECTORS

All the 4 executive directors had or should have knowledge of the financial affairs of PATIMAS including these transactions and were in a position or had the reasonable means to detect, ascertain, address and/or resolve the veracity of the transactions and the audit issues arising from the same.  This was particularly in light of the nature, irregularities and magnitude / materiality of the transactions and their position, roles and responsibilities in the Company (including as directors in the subsidiaries involved in these transactions) as well as their knowledge of and/or involvement in the transactions.

The directors had failed to demonstrate reasonable efforts taken to discharge their duties vis-à-vis the Company particularly in respect of the following:-

1. to ensure proper maintenance and provision of documents and records vis-à-vis the transactions to facilitate the preparation of accurate and submission of timely financial statements;
2. to detect the irregular transactions that have been made / purported to be made by the Company particularly when the transactions were unusual / had peculiar characteristics and of such magnitude and to ascertain, address and/or resolve the audit issues vis-à-vis the transactions to ensure veracity of the transactions; and
3. to ensure that there were proper and effective internal controls, risk management and compliance process established, maintained and implemented towards ensuring the integrity of the Company’s financial information and veracity of the transactions vis-à-vis compliance of the Company’s financial reporting obligations. 

Bursa Securities wishes to remind all listed companies and their directors that adequate and effective system of reporting and supervision / internal control function is crucial in ensuring that the information upon which they relied is indeed accurate and reliable as well as that management and employees are subject to supervisory checks and balances to ensure that they operate in accordance with the scope of authority delegated and well within the laws and regulations.  In compliance of financial reporting obligations under the Main LR, these internal audit system and controls are crucial towards ensuring integrity of financial information and should take into consideration and/or evaluate the potential for the occurrence of fraud and how the organization fraud risk should be managed and assess the adequacy and effectiveness of controls in responding to risks within the organization’s governance, operations, and information system.