PUBLIC REPRIMAND FROM THE SECURITIES COMMISSION

SC slaps penalty on Affin Investment

July 4 2006

THE Securities Commission (SC) has publicly reprimanded Affin Investment Bank Bhd, formerly known as Affin Merchant Bank, and slapped a penalty on it whereby it cannot submit certain corporate proposals to the regulator for three months.

The punishment started yesterday and the SC said it would not accept proposals under Section 32 of the Securities Commission Act 1993.

This section covers proposals like bonus issues, initial public offers, the purchase of securities or assets using shares and major deals that changes the business of a company, among others.

Affin Investment had failed to discharge its responsibilities as principal adviser and independent placement agent to a restructuring scheme proposed by Omega Holdings Bhd, the SC said in a statement released yesterday.

The SC statement confirms an article carried by the Business Times on Monday.

Under Omega's restructuring scheme, a newco Energro Bhd was to take over the listing status of Omega.

The scheme involved the injection of a new business into Energro, namely to distribute Alfa Romeo cars in Malaysia, under a sales concession agreement between Milan Auto (M) Sdn Bhd, the controlling shareholder of Energro, and Fiat Auto SpA of Italy.

Affin Investment, as the principal adviser, had submitted the proposal for the restructuring scheme of Omega on January 31 2003. However, this was revoked by the SC on August 2 2004 after it discovered that the agreement had been terminated.

Affin Holdings Bhd, parent of Affin Investment, told Bursa Malaysia that without the concession, which was central to the SC's approval, the SC considered the proposal to be no longer viable.

On this basis, the SC found that Affin Investment had failed to verify the status and validity of the agreement with Fiat Auto, despite notification by the SC.

It said that Affin Investment had instead continued to rely on representations made by Milan Auto and Energro that the agreement was still valid.

Further, in its capacity as independent placement agent, Affin Investment had failed to exercise its responsibilities and instead allowed Milan Auto to directly place out Energro shares which constituted a breach of the SC's rules and a breach of the SC's condition of approval for the scheme.

However, the SC noted Affin's efforts to mitigate risks by establishing a set of internal risk assessment procedures and guidelines under the direction of its new president and chief executive officer.

The above news was extracted from today's NST Business Times. To view the full picture of the news do visit the following web page http://www.btimes.com.my/Current_News/BT/Tuesday/Frontpage/BT575386.txt/Article/

This public reprimand was also announced at http://announcements.bursamalaysia.com/linkwebmainpage.nsf/lca.htm under the announcement section of Affin Holdings Berhad on 3 July 2006.

Some of you may know that I work in the investment bank. My intention of publishing this article is just to clarify what has actually happened in the past. I was not in the investment banking industry at that time. Almost all the team members involved in the corporate proposal at that time had left the bank. There was not any intention from the ex-staff nor the bank to defraud the Securities Commission (SC) and the public. The intention of defrauding the public and the SC was from the promoter, Kenneth Chow (KC). As a result, KC was convicted and the Reporting Accountants from the (big 4) ware also prosecuted under the SC Act. If you bumped into me, I would appreciate that questions (just in case you may be curious why such a bad news appeared in the newspaper) relating to the public reprimand on Affin Investment Bank Berhad from the SC to be refrained. I am currently not in a good mood to answer such questions. I'll let you know perhaps 2 weeks later. It was quite a bad day for the Bank whereby on 3/7/2006, the Bank had changed its name and the Bank received a public reprimand from the SC for breach of securities law. You may also notice that this news also appeared in other national newspapers.

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