The court ruled that a forfeiture application requires proof that the property is derived from unlawful activity, and the relevant offence must be classified as serious at the time of the alleged conduct.

Ahmad Kamal Md Shahid J:

Introduction

[1] This application pertains to the forfeiture of property under s 56 of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 ("AMLATFPUAA"). The applicant sought an order for theforfeiture of 5,792,000 units of shares in Bright Packaging Industry Berhad ("BPI"). These shares were held in the equity account of the 1st respondent at RHB Investment Bank Berhad and were referred to as the "Seized Shares". The basis of the application rested on the allegation that the respondents had committed an offence under s 179 of the Capital Markets and Services Act 2007 ("CMSA").

[2] The applicant contended that the respondents had engaged in manipulative and deceptive practices in relation to certain corporate exercises undertaken by BPI. These exercises included a Rights Issue, a Private Placement and an Employees' Share Option Scheme ("ESOS") (collectively referred to as "BPI Corporate Exercises"). It was alleged that the respondents had misappropriated proceeds derived from these exercises and subsequently utilized those funds to acquire the Seized Shares.

[3] Initially, the applicant also sought an order under ss 63 and 64 of AMLATFPUAA. This order was to declare that the 2nd respondent, who had allegedly absconded, be deemed to have been convicted of a serious offence. However, on 13 June 2022, the applicant amended the Notice of Motion ("NOM") and withdrew all reliefs sought under ss 63 and 64 of AMLATFPUAA.

[4] Upon careful examination of the extensive affidavits submitted by both parties and after considering the detailed written submissions, I found that the application lacked merit. Accordingly, I dismissed the application. My reasons are elaborated in the following paragraphs.

Brief Background Facts

[5] BPI is a public-listed company. Between 2013 and 2015, BPI conducted three corporate fund-raising exercises. The first was a Rights Issue exercise. BPI announced this exercise on 14 October 2013 and completed it on 23 January 2014. This exercise raised a total sum of RM47,613,390.00. According to the abridged prospectus dated 19 December 2013, RM26.4 million of the proceeds was allocated for the purchase of additional production lines. A further RM11 million was designated for the implementation of an Enterprise Resource Planning system ("ERP system").

[6] The second Corporate Exercise was a Private Placement. BPI announced this exercise on 4 June 2014 and completed it on 30 July 2014. This exercise raised RM7,791,000.00. The stated purpose of the proceeds was to upgrade existing production lines and to purchase raw materials.

[7] The third Corporate Exercise was an Employees' Share Option Scheme ("ESOS"). BPI announced this scheme on 18 April 2014. The ESOS was implemented in two tranches. The first tranche was completed on 24 February 2015. The second tranche was completed on 24 April 2015. The total sum raised from both tranches amounted to RM13,283,500.00.

[8] The applicant alleged that after the completion of these Corporate Exercises, the respondents misappropriated a total sum of RM56,074,500.00. The applicant contended that the respondents executed a series of transactions involving multiple companies allegedly controlled by the 2nd respondent. These companies were referred to as nominee or vehicle companies.

[9] The respondents allegedly transferred funds from BPI to these companies under the guise of payment for goods and services. However, these payments were purportedly based on fictitious invoices for goods and services that were never provided. The funds were then allegedly moved through various accounts before being used to acquire the Seized Shares.

[10] On 10 May 2019, a freezing order was issued pursuant to subsection 44(1) of the AMLATFPUAA. This order applied to the equity account of the 1st respondent bearing account number 240353. This account contained 5,792,000 units of BPI shares.

[11] On 5 August 2019, a seizure order was issue