Transmile’s share price plummeted on the news that Transmile’s directors being informed by the firm’s auditors, Deloitte & Touche, in early May that they had not been able to obtain relevant supporting documentation from management to confirm the validity of “certain transactions involving trade receivables and related sales and additions to property, plant and equipment”.

All we know at this moment in the wake of CIMB Group recently appointing PricewaterhouseCoopers to review the 2005 financial statements of Southern Bank Berhad (acquired by CIMB), Securities Commission’s investigations into and charges against senior managers of GP Ocean Food Berhad and Nasioncom, is that the state of corporate and financial governance of our corporates leaves much to be desired.

Nothing is known at this moment who is responsible and whether Chairman of Transmile -former MCA President and Cabinet Minister, Tun Dr. Ling Liong Sik – is implicated in any way or entirely innocent without being in the know.

Dodgy creative accounting (recognition of front end income without matching against expenses that will be incurred later), fictitious business transactions from fictitious delivery orders and invoices to inflate sales and profit figures – for purposes of whether to convince bankers for additional credit lines, institutional investors or fund managers to take placement of shares to support market price or to rig and push share price – may be done by any CEO, CFO or any management staff, accountant, book keeper, sales manager of a corporation, and the question is always from whom they take their instructions.

They make take the instructions from a director unknown to other directors or even a substantial shareholder other than the two major shareholders of Transmile (17% Kuok Group that initiated the probe or Khazanah), not necessarily a director though he controls the appointment or dismissal of directors or even some third party not in the company controlling behind either substantial shareholder or directors.

It is also not known what part, if any, external auditor(s), present or past, or any partner responsible for Transmile accounts have contributed to the fiasco or could have played a part to discover the irregularities earlier.

Before through investigations and completion thereof, there are just too many unknowns at this moment for any finger pointing at any one including the Chairman to make a clean breast of his responsibilities and remunerations including all forms of allowances which he had drawn from Transmile in his capacity as Transmile Chairman.

It is however agreed that regulatory authorities should immediately conduct an extensive investigation to ferret out the facts.

Pending investigations the Chairman should remain silent. What could he say? If he says he knows nothing, it is self serving and worth nothing. It is up to independent investigations to vindicate him. If he points at others, it is also unfair because what he says could compromise and influence investigations which should be independent and unbias.

It is not the case of being apologist for these people but look at the facts and realities.

Directors “are individually and collectively, responsible for the affairs of the company of which he is a director” as stated by Winston provided the affairs of the company in question – for which they are ostensibly vicariously responsible as alter ego and agent of the company and imputed constructive knowledge – are those in the ordinary course of business and sanctioned by the authorities conferred in the Memorandum and Articles of Association (“M&A”) of the company (available for inspection to public in the Companies Commission of Malaysia).

Fraud, falsification of documents like invoices and delivery orders, dodgy accounts and book keeping are not activities sanctioned by the M&A and if carried out are illegal activities and prosecutable offences that cannot automatically be attributed to each and every director because in such unsanctioned matters, directors are not imputed to have exercised ostensible authority or imputed constructive knowledge. In fraud and illegal activities they must have actual knowledge to the accountable and prosecutable.

The Kuok groyuop has 17% equity stake in transmile. Surely uit has board representation. Does it mean its director(s) know? If so why is the probe being ordered by Kuok group?

Even the Chairman : as a matter of corporate practice, one has an Executive Chairman or a Non executive Chairman. Which is Ling? Even if he were Executive, did he as director sign any accounts passing off as correct when they are not? Did he know? Is he supposed to know if internal accountants did creative accounting and signed off as audited by external auditors?

As much as one should not be an apologist for the sake of being a apologist one should not be a detractor for the sake of being detractor. Find out what are facts. Just because we don’t like someone politics and whatever else he has done does not presume he is guilty in every scandal to which his name is linked!

Immense losses suffered by small investors warrant thorough investigations to bring those responsible to brook. It is unsafe to assume all in upper echelons would order or know about sheninegans of accounts. Misdeeds of fraud/falsification of accounts are criminal – outside authority of M&A – and not predicated on constructive as distinct from actual knowledge of its officers/directors. SC prosecutes those responsible in GP Ocean and Nasioncom : does it prosecute every director? To just accuse anyone because he is s director or chairman without the facts backing trhe claim is to invite the prospect of being sued for libel for which the defence of justification/fair comment is not even available.