PUTRAJAYA, Mar 20: Adjudication of guilt or innocence of an accused person is left to the courts with freedom to decide, says Federal Court judge Tan Sri Jeffrey Tan Kok Wha in a Federal Court judgment over a referral of constitutional questions relating to a provision in the Securities Industry Act 1983.
He said Section 122(1) of the Securities Industry Act did not violate the doctrine of presumption of innocence until proven guilty.
Instead, he said that section gave opportunity to the directors or representatives of companies to rebut the presumption they had committed the offence, which was committed by the corporate.
Section 122(1) deems a company director, chief executive officer or representative of the company, to have committed an offence on the company, unless he can prove the lack of consent or connivance on his part and the exercise of diligence to prevent the commission of the offence.
In the 77-page judgement, Tan said that section maintained the burden of proof, in that the prosecution must prove a charge against an accused beyond all reasonable doubt, adding that the section also upheld the doctrine of separation of powers.
Last Wednesday (March 15), a five-man Federal Court panel led by Chief Justice Tun Arifin Zakaria ruled that Section 122(1) of the Securities Industry Act was valid and did not violate the Federal Constitution.
Tan delivered the court’s judgment. Also presiding on the court panel were Federal Court judges Tan Sri Ahmad Maarop, Tan Sri Hasan Lah and Tan Sri Abu Samah Nordin.
The court delivered the decision in respect of a referral application by Transmile Group Bhd’s former chief executive officer Gan Boon Aun for the Federal Court to determine five questions of law relating to that provision.
Gan was charged in 2007 by the Securities Commission for abetting Transmile in making a statement that was misleading in a material, particularly relating to the company’s revenue in its quarterly report on unaudited consolidated results for the financial year ended Dec 31, 2006.
This was likely to induce the purchase of Transmile’s shares by other persons.
Gan was also charged in the alternative with having furnished a misleading statement to Bursa Malaysia Securities Bhd in the same financial statement.
He was called to enter his defence on the alternative charge after the close of the prosecution case.
Tan said the offence must be proved to have been committed by the corporate before it could be deemed that the offence was committed by its directors or its officers.
“Yes, section 122(1) provides that directors and, or officers of the corporate shall be deemed to have committed the corporate offence. But there was no let-up in the burden or standard of proof.
“It remained that the prosecution had to prove the offence beyond all reasonable doubt before the deeming provision could be triggered,” he said, adding there was no displacement of the presumption of innocence.
“The evident aim of the Securities Industry Act was to regulate the industry, promote public confidence in the integrity of the stock market, and punish violators with criminal and civil liability,” he added.
He said conviction was punishable with fine and imprisonment, not fine or imprisonment but only individuals could be locked up and a corporate could not be locked up, adding that if individual directors and, or officers were not indicted, the punishment of fine and imprisonment could not be imposed.
Tan said in reality, all activities of a corporate were managed by its directors and or officers and crimes and offences of a corporate could not come about without the acts and, or defaults of its directors and or officers, adding that the presumption in section 122 (1) was not only fair but was also absolutely necessary to protect the stock market.
He said if it was true that section 122 (1) adjudicated on guilt, then Gan would not be tried at the trial court, noting that guilt or innocence had yet to be decided, pending Gan’s defence.
“For if so, then the respondent (Gan) would have been sentenced, the moment it was proved that the corporate committed the offence. But his defence was called,” he added.