By Hafiz Yatim | The Edge Markets
The prosecution from the Securities Commission of Malaysia (SC) told the High Court there was nothing wrong with the Sessions Court decision in 2016 to convict former Repco Holdings Bhd chairman Low Thiam Hock for market manipulation of the company’s shares in 1997.
SC Deputy Public Prosecutor (DPP) Shoba Venu Gobal said what was important was that Low’s specific intention in making the purchase of 227,000 units of Repco shares was to support its price artificially following the abortion of the RM500 million Rekapacific Bhd deal.
“There is sufficient appreciation of evidence by the learned Sessions Court judge specific to the mens rea (criminal intent) of Low when he made the purchases.
“The prosecution humbly submits that there is no misdirection in law by the learned Sessions Court judge with regards to the application and object of section 84(1) of the Securities Industries Act (SIA), [under] which Low was convicted,” she said.
Shoba, who appeared with DPPs Mohd Izuddin Mohamad and Mohd Hafiz Mohd Yusof, further submitted that there was “overwhelming evidence” to show that Low’s purchase was to support the price of Repco shares, instead of enabling Teras Cemerlang Sdn Bhd to consolidate its controlling stake in Repco.
“There is overwhelming evidence to show that the purpose of the purchase on Dec 3, 1997, was to support the price of Repco shares from falling, contrary to Low’s defence contention regarding the consolidation of Teras Cemerlang’s controlling stake in Repco,” she said.
She said there were four prosecution witnesses who testified about the release of the RM25 million loan (from Sime Bank) that was fully utilised by Low to purchase 227,000 Repco shares on that day.
One of the witnesses, she added, even testified that Low had fully utilised all RM25 million released to purchase 227,000 units Repco shares including the last tranche of RM5 million that was released on the last 10 minutes before the market closed at 5pm on Dec 3 that year.
Purchase not for national duty to revitalise economy
Another witness who was in a meeting with Low also testified that a reason for Low’s purchase of Repco shares following the abortion of the Rekapacific deal was that Repco’s share price may be affected, Shoba said.
Further, Low was concerned Repco shareholders would sell their shares upon re-quotation and Repco’s share price would fall upon re-quotation.
Shoba said the same witness also testified that Low never informed the witness that the purpose of the loan was for Teras Cemerlang or as part of national duty to revitalise the economy.
Shoba and the SC were replying to Low’s defence to set aside his conviction and sentence.
Low, 60, was convicted under section 84(1) of the SIA for carrying out acts calculated to create a misleading appearance, with respect to the price of Repco shares on the Kuala Lumpur Stock Exchange on Dec 3, 1997.
For this, he was sentenced by the Sessions Court in 2016 to five years’ jail and fined RM5 million, which he is presently appealing against.
Low was initially acquitted without his defence being called, and the decision was upheld by the High Court. But the Court of Appeal reversed the decision and ordered him to enter his defence, and the trial resumed in the Sessions Court before another judge, which resulted in his conviction.
Last month, Low’s defence team submitted that the Sessions Court judge had erred in not taking into consideration the defence expert witness and empirical research to show that it was not market manipulation as alleged in the charge, but an averaging in.
Averaging in is buying more shares at a lower price than what one previously paid, and according to the events, Low purchased the shares beginning at 11.39am on Dec 3, 1997, in a bid to prevent the share price from falling further, they argued.
Prosecution says defence an afterthought
Shoba said the prosecution expert witness had expressed his surprise at the rise in Repco shares upon re-quotation on Dec 3, 1997 following the announcement of the abortion of the Rekapacific deal, when the news should have been viewed negatively.
“Our expert further testified that based on his analysis on the movement, there is a strong correlation between Low’s trading behaviour and the upward movement of Repco’s share price,” she said, adding when there was no buying, the price fell flat.
She added that the Sessions Court judge was right in finding Low’s defence as a mere afterthought and in convicting him.
The prosecution further asserted that Repco was not profitable as Low had claimed as in the financial year ending June 30, 1998, it showed losses of RM63.2 million.
“The drop in the price of Repco shares was a genuine concern to Low, due to the exposure in the accounts under his control,” she added.
The DPP pointed out that the defence’s argument that the Sessions Court judge had erred is incorrect as his findings are based on evidence established not just by the prosecution witnesses but also the witnesses called by the defence.
She said there are cogent overwhelming evidence to show that Low was genuinely concerned regarding the impending fall of Repco’s share price following the announcement on the abortion of the Rekapacific deal.
Meanwhile, Low’s lawyer Joshua Tay told the High Court that the prosecution expert witness himself never concluded there was manipulation as stipulated by the Session Court judge and this was in contrast to the defence expert witness who confirmed there was no manipulation at all but averaging in.
“If the Sessions Court were to follow the case closely, he will find there is no manipulation,” Tay said.
Tay reiterated that Low’s defence on his purpose for buying Repco shares was to consolidate his holding in Teras Cemerlang and the purchase was not manipulation.
The case before Judicial Commissioner Datuk Azhar Abdul Hamid is to resume on Nov 10. He had asked the parties to file additional written submissions before delivering a decision on the appeal.