Posted by EngineeringProfit > 3 weeks ago | Report Abuse

MACC is toothless to recover stolen money while LHDN sleeping on job...........That's why the middle class has to be squeezed

Posted by EngineeringProfit > 3 weeks ago | Report Abuse

If all the culprits are made to pay back, certainly all Rakyat will continue to be supported by the government during this post-pandemic challenging time

Posted by EngineeringProfit > 3 weeks ago | Report Abuse

Here are five key points raising concerns around the Khazanah Nasional and Permodalan Nasional Berhad (PNB) investments in FashionValet, especially as they pivoted operations and shut down their core platform:

1. Suspicious Abrupt Shift in Business Model: FashionValet received substantial investment from government-linked firms, Khazanah and PNB, only to later pivot its business focus entirely to its in-house brands, dUCk and LILIT. The closure of FashionValet’s online platform was abrupt, especially considering the capital injected to expand their retail presence and enhance operational capacity just before the pivot. Critics question if these funds were used as planned or redirected with little transparency, sparking concerns about misuse of investment intent.

2. CBT Redirection of Resources: Funds from Khazanah and PNB were intended to support FashionValet as an e-commerce platform connecting multiple brands. Instead, these resources were reallocated to boost only dUCk and LILIT, effectively sidelining the original mission. This redirection without clear prior disclosure appears to have strained trust with investors, raising suspicion about whether the initial investment terms were met in spirit.

3. Potential Accounting Fraud - Profit Diversions and Dividend Payouts: Speculative reports indicate that FashionValet might have paid out dividends (around RM4.2 million in 2018) shortly before it pivoted to focus solely on its own brands, rather than reinvesting in the e-commerce platform or expanding its core business. If accurate, these actions could indicate strategic cash-outs by major stakeholders before shifting the business model, which adds to the perception of possible fund mismanagement.

4. Unaccountable Unusual Write-offs: FashionValet's 2017 financial records included a significant RM2.284 million write-off for web development expenses. The lack of confirmation from associated parties about this write-off has led some to question if this might mask other financial practices. Given the relatively low cost of Magento (the platform they were using), this high expense for a web template raises eyebrows.

5. Insensible High-Cost Capital- losing Physical Stores Despite Online Model: While positioned as an online marketplace, FashionValet invested heavily in physical store expansions at premium locations, incurring significant overhead costs. This move into offline retail spaces was unexpected and appeared misaligned with the original value proposition of an e-commerce-focused model, raising questions on the necessity and timing of such expenses in relation to the platform's closure.

Posted by EngineeringProfit > 3 weeks ago | Report Abuse

For no.1 : The abrupt shift in FashionValet’s business model after substantial investments from government-linked corporations, such as Khazanah and Permodalan Nasional Berhad (PNB), raises several legal concerns under Malaysian law, particularly regarding the proper use of investment funds, transparency, and fiduciary responsibilities. Below are specific Malaysian laws and regulations potentially implicated:

1. Companies Act 2016 (CA 2016):
- Section 132: This section emphasizes the duty of directors to act in the best interests of the company, to avoid conflicts of interest, and to exercise reasonable care in the company’s management. Any drastic business pivot—like shifting from FashionValet’s platform to in-house brands (dUCk and LILIT)—must be justified as beneficial for the company’s stakeholders, including its investors. A lack of transparency or failure to inform and obtain consent from significant shareholders could constitute a breach of directors' fiduciary duty.
- Section 289: Misrepresentation or providing false or misleading information about a company’s affairs, including financial projections or intended business direction, is prohibited. If the company misled investors about the intended use of funds, it could be liable for misrepresentation, which may lead to civil penalties or shareholder actions.

2. Capital Markets and Services Act 2007 (CMSA 2007):
- Section 317A: This provision requires disclosures to be true and not misleading, especially when involving government-linked investors. If FashionValet presented one business plan to attract capital but subsequently used the funds differently without proper disclosure or approval, this could violate requirements for transparency and fair dealing.
- Section 320: Any abrupt pivot in the business model that was not disclosed to investors can be seen as a “false or misleading statement” regarding material information if the funds were allocated with expectations based on FashionValet’s original business plan.

3. Trustees Act 1949 (Revised 1978):
- Government-linked investors, like Khazanah and PNB, act as trustees of public funds. They are expected to ensure that investments align with public interests and adhere to prudential standards. A shift in business strategy without consultation or a clear justification might indicate a misuse of funds entrusted to these entities, potentially constituting a breach of the trustees' fiduciary duty under the Trustees Act.

4. Financial Reporting Standards (FRS):
- All companies in Malaysia, particularly those receiving public funds or significant investment from government-linked corporations, are required to maintain transparent and accurate financial records under the Malaysian FRS. An abrupt business model change without proper disclosure in financial reports could be considered a failure to provide a true and fair view of the company’s financial position and operations.

5. Anti-Corruption Laws:
- If any influence or arrangement unduly favored FashionValet to secure funding under the pretense of expansion but ultimately used these funds to pivot towards in-house brands, this could potentially fall under the purview of Malaysia’s Malaysian Anti-Corruption Commission Act 2009 (MACC Act 2009). Sections of the Act criminalize the misuse of funds, abuse of power, or any acts of corruption involving public monies.

Posted by EngineeringProfit > 3 weeks ago | Report Abuse

For no.2 : To examine potential Malaysian laws that might have been violated in a case like this, especially in a situation where funds intended for a specific purpose were allegedly redirected, we can focus on several legal frameworks. The key issues here are potential criminal breach of trust (CBT), the misrepresentation of investment objectives, and the obligations of fiduciary duties to stakeholders.

1. Criminal Breach of Trust (CBT)
In Malaysia, CBT is governed by Section 405 of the Penal Code. This section outlines that an offense occurs when an individual entrusted with property or authority over it misappropriates it or uses it in violation of any legal direction. Redirecting funds from Khazanah Nasional and Permodalan Nasional Berhad (PNB)—two key investment entities in Malaysia—into different areas than initially intended, such as focusing only on dUCk and LILIT, could be interpreted as misappropriation if it contradicts the original agreements.

- Example: If the funds were specifically earmarked for expanding an e-commerce platform connecting multiple brands, but were instead used predominantly to develop only two brands, this could be seen as a violation of the terms under which the funds were entrusted.
- Rationale: CBT laws are intended to safeguard against any breach of trust that could harm stakeholders financially or reputationally.

2. Breach of Fiduciary Duty
Fiduciary duty obliges company directors and officers to act in the best interests of their shareholders or investors. Under the Companies Act 2016, directors must carry out their responsibilities honestly, in good faith, and in a manner they believe is in the best interest of the company. If the redirection of resources prioritized specific brands over the broader e-commerce mission, this could signal a breach of fiduciary duty.

- Example: Directors or executives may be found in breach if they failed to disclose the reallocation of resources to investors or did not act transparently about how funds would be distributed.
- Rationale: Fiduciary duties are meant to protect investors and ensure directors do not exploit their positions for gain inconsistent with the company’s interests. If the original objective was sidelined without proper disclosure or shareholder approval, the directors could be liable for this breach.

3. Securities Laws on Disclosure and Misrepresentation
The Capital Markets and Services Act 2007 (CMSA) includes provisions against misrepresentation, where any disclosure to investors must be accurate and complete. If FashionValet's leaders assured Khazanah and PNB that the funds would be used specifically to build a multi-brand e-commerce platform but redirected them without transparent updates, they could face allegations of misrepresentation.

- Example: If FashionValet provided investors with an investment prospectus or statement that promised expansion across multiple brands and later deviated from this without notifying investors, they may be liable for misrepresentation.
- Rationale: Securities laws are designed to foster transparency and protect investors. Any redirection of resources without updating investment stakeholders can be seen as a breach of these disclosure requirements, potentially leading to penalties or sanctions.

4. Corporate Governance Violations
Malaysia’s Code on Corporate Governance emphasizes transparency and accountability. This code encourages companies to ensure that their strategies align with communicated objectives. Reallocating funds could signal governance issues if it departs from the corporate strategies communicated to Khazanah, PNB, or other shareholders.

- Example: The board might face scrutiny if it’s shown that strategic decisions were made to benefit specific brands (dUCk and LILIT) without approval from, or clear communication with, stakeholders.
- Rationale: Strong governance practices are central to protecting investor interests and ensuring that company leadership is held accountable for major decisions. Unilateral decisions that prioritize certain projects can harm trust and are often viewed as governance breaches.

5. Misuse of Public Resources (if applicable)
If Khazanah and PNB funds are sourced from public money, any redirection that does not align with stated objectives could be seen as a misuse of public resources. Public fund misuse is a serious offense in Malaysia and could lead to investigations by government oversight bodies.

- Example: Suppose public resources intended to support a diverse range of brands were instead funneled disproportionately into only two brands. In that case, the company could face questions on its commitment to the intended goals of the funding.
- Rationale: Public resources are held to high standards of accountability. The goal is to ensure that such funds benefit the intended stakeholders rather than selectively boosting a few brands or individuals.

Posted by EngineeringProfit > 3 weeks ago | Report Abuse

For no.3 : In Malaysia, if there are allegations of accounting fraud, profit diversions, or mismanaged dividend payouts, several legal frameworks and regulatory bodies may come into play, potentially leading to investigations and sanctions if violations are found. Here are the relevant laws and regulations that could be applicable to the scenario described:

1. Companies Act 2016 (CA 2016)
- Section 213: Directors’ Duties — Directors are legally required to act in the best interest of the company, with due diligence, skill, and care. If FashionValet directors approved dividends while being aware that these payouts might harm the company's financial stability or reinvestment needs, they could be held liable for breaching their fiduciary duties.
- Section 248: Duty to Keep Proper Accounting Records — If accounting irregularities are suspected, failure to maintain transparent, accurate records is a violation. This can apply if accounting was manipulated to enable profit diversions or mask financial issues.
- Section 131 and 132: Solvency Requirements for Dividend Declaration — Dividends can only be declared if the company is solvent. If FashionValet paid dividends without meeting solvency criteria, this could constitute a breach of CA 2016, with directors potentially facing personal liability.

2. Financial Reporting Standards (FRS)
- Under Malaysian Financial Reporting Standards, companies are required to present accurate financial statements that reflect their true economic position. If there were omissions or inaccuracies related to profit diversion or dividend payouts, this could breach FRS. Such misconduct can lead to penalties for misleading financial disclosures.

3. Malaysian Code on Corporate Governance (MCCG)
- The MCCG establishes ethical guidelines and good corporate governance principles. If there were instances of cash-outs by stakeholders at the expense of the company’s long-term strategy or stability, it would go against MCCG principles. Though the MCCG itself doesn’t have legal penalties, breaches could negatively affect the company’s reputation and result in regulatory scrutiny.

4. Securities Industry Laws:
- If FashionValet was publicly listed or involved in the capital market, violations of these laws could occur:
- Capital Markets and Services Act 2007 (CMSA): Provisions under the CMSA address fraudulent financial statements and the manipulation of a company’s finances for improper gain.
- Securities Commission Malaysia (SC): The SC has oversight over public offerings and could investigate if profit diversion or dividend mismanagement impacted shareholders.

5. Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA)
- If any profit diversions were hidden or involved any financial maneuvering to disguise true financial activities, AMLATFA could be invoked. This act applies to money laundering activities and requires accurate reporting of financial transactions.

6. Income Tax Act 1967 (ITA)
- If funds were diverted in a manner that affects corporate tax liability, it could be a breach of the Income Tax Act. Companies are legally required to report profits accurately, and any intentional diversion that reduces tax liabilities might lead to penalties.

Possible Consequences and Enforcement Actions:
- Fines and Penalties: Breaches of CA 2016 or CMSA provisions could result in heavy fines.
- Director Disqualification: If directors are found to have violated fiduciary duties or other provisions, they may be disqualified from serving as directors in the future.
- Civil and Criminal Charges: Severe cases involving fraud or deliberate misrepresentation may lead to civil lawsuits or criminal charges against individuals involved.
- Investigations by Relevant Authorities: The Companies Commission of Malaysia (SSM), SC, and Malaysian Inland Revenue Board (IRB) may initiate probes into the matter, especially if shareholders or other stakeholders lodge complaints.

If the allegations of profit diversion and dividend payouts are substantiated, these legal provisions may be used to hold FashionValet’s directors or executives accountable.

Posted by EngineeringProfit > 3 weeks ago | Report Abuse

For no.4 : If the RM2.284 million write-off for web development costs was indeed unusual and unsupported, potential violations under Malaysian law include:

False reporting under the Companies Act 2016 (up to RM3 million fine and 10 years imprisonment),
Incorrect tax submission under the Income Tax Act 1967 (penalties of 100-200% of tax due and imprisonment up to three years),
Potential corruption liability if funds were misused under MACC Act 2009 (10 times bribe amount fine and RM1 million minimum fine).