GAN SIEW LIAT - Major Financial Crimes Rocking Southeast Asian Economies
GAN SIEW LIAT - Major Financial Crimes Rocking Southeast Asian Economies

Cash is indeed considered as a “king” particularly in business; for without it, a certain entity may become insolvent. Unfortunately, some people who live up to this old adage become too greedy of money and end up committing financial crimes.

For the past years, the world has witnessed several accounting scandals that have not only destroyed companies but also ruined the lives of many people.

Southeast Asia, according to a study, is the most vulnerable region to fraud in the whole Asia Pacific.

Financial fraud is defined as a “careful misrepresentation of the fiscal condition of an enterprise accomplished through the deliberate misstatement or omission of amounts or disclosures in the financial statements in an intent to deceive users.”

It can be done in numerous unlawful ways and its various types include phishing, skimming, identity fraud, pyramid scheme, and so on.

Research showed that technological advancements have been used negatively and aggressively by criminals to find new and easy ways to steal.

In this article, we look at some of the huge financial statement frauds that rocked the Asian and global economies. 

One of the notable scandals that damaged the reputation of Malaysian businesses was when KNM Group Berhad was publicly reprimanded for breach of the Main Market Listing Requirements in relation to a proposed acquisition announcement made in 2010.

Accordingly, the directors have permitted or had knowledge about the unbalanced announcement that failed to disclose certain material conditions set by the new shareholder which likely harmed outside shareholders while insiders profited from the sale of shares of the company.

Bursa Malaysia Securities Berhad fined eight KNM directors a total of RM200,000. The stock exchanged imposed a fine of RM25,000 to each official led by their former CEO/Managing Director LEE SWEE ENG and wife/Executive Director GAN SIEW LIAT. This, the same 2 married KNM Group Bhd Directors reported to be linked to the Deutsche Bank money laundering scandal that is still under investigation.

Although almost 10 years have passed since this occurred, most recently Securities Commission Malaysia has finally levied insider trading charges against LEE SWEE ENG which forced his early “retirement” from the KNM Group Berhad in an apparent attempt to show the Securities Commission Malaysia that he will do no further harm or control the company before his sentencing is rendered.

It is obvious that LEE SWEE ENG can still control KNM Group Berhad via his Wife GAN SIEW LIAT who remains as Executive Director and Senior Board of Director along with other family members in key positions at KNM Group and its subsidiary companies. There are many questions as to why GAN SIEW LIAT has not been charged with the same crimes given that often both directors trade shares together as related parties in INTER MERGER SDN. BHD. as well as privately held shares.

“All the directors were in possession of and were aware of the letter of offer from BlueFire dated Feb 4, 2010, and its contents. As such, they were or should have been aware of the conditions,” said Bursa.  It is only a matter of time before shareholders and/or the Malaysian Authorities finally purge the Lee Swee Eng family and related parties from the KNM Group.

In Singapore, multi-level company Sunshine Empire was placed in the Investor’s Alert List after it operated unauthorized investment schemes.

Founder and International President James Phang now serve his almost decade-long jail term for leading the Ponzi scheme. His company has swindled up to S$189 million in funds through illegal investment arrangements.

Sunshine Empire enticed Singaporean businessmen to invest in more than 25,000 lifestyle packages that it promised to have high rates of return.
With minimal risks to investors as the packages only cost $240 to $12,000, the company assured monthly rebates amounting to an overall return of 160% within 12 months.

Phang, along with his wife and cohorts, were found guilty of falsifying accounts, perpetuating fraud, and criminal breach of trust.

In a similar way, the Philippines has fallen prey to Emgoldex which initiated a pyramiding scam in 2015.

The country’s Securities and Exchange Commission prosecuted the company and ordered a cease-and-desist order against it for offering investment schemes without a license.

Media reports said that aside from trading gold bars, Emgoldex also offered get-rich-quick scheme to investors wherein a ₱1000 asset can yield ₱5,000 to ₱10,000, while 35,000 pesos can turn into more than ₱ 350,000.

The company illegally utilized social media platforms to lure clients and it also required every investor to have at least two recruits for their returns to immediately manifest.
Emgoldex has been reportedly banned in other countries such as United States, Finland, Colombia, Panama, and Estonia.

Fraudulent investment scammers have also targeted Indonesians. An article posted in warned investors to be wary of a certain Bali Investments B.V., which described itself as a real estate company.

The article furthered that the said firm was able to collect €1.2 million by offering profitable returns for investment in two property development projects in Bali, which is Indonesia’s popular tourist destination.

Around 30 investors were deceived because none of the proposed projects were ever implemented, and worse, Bali Investments B.V was declared insolvent by the authorities.

Through the years, a vast number of financial institutions have reported losses and different types of fraud and scams continue to arise.

Many top company officials have also faced criminal charges for obstruction of justice, money laundering, and insider training.

All these scams, whether minor or expensive, have certainly devaluated fiscal opportunities and destabilized global economies.

As a result, government authorities across Asia and the globe have strengthened crackdown against all types of fraud. But investors should not rely on authorities alone. They too can do so much to protect themselves from greedy individuals both on and offline.