KUALA LUMPUR: The Federal Court has ruled in favour of the Securities Commission’s (SC) appeal to protect statements provided by its witnesses, hence overturning the decision of the Court of Appeal.

The SC said in a statement yesterday that the Federal Court ruled that statements given by individuals to the SC were considered to be communications made to a public officer in official confidence.

The SC said that on Jan 19, in a unanimous decision, the Federal Court held that statements recorded by an SC investigating officer in the course of its investigation “are protected from disclosure in both civil and criminal proceedings as a matter of public interest”.

The Federal Court in overruling the decision of the Court of Appeal held that section 134(4) of the Securities Commission Act must be read subject to the rules of privilege and public policy.

In a written decision released by the Federal Court, Justice Tan Sri Ahmad Maarop held that these rules of privilege and public policy applied to civil as well as criminal proceedings.

According to the judgement, disclosure of documents in civil proceedings may be withheld on the ground that such disclosure would be injurious to the public interest.

The SC said the judgement further held that statements given by individuals to the SC were considered to be communications made to a public officer in official confidence and if the witness statements were ordered to be disclosed, future witnesses would not give information to the SC and this would greatly prejudice the SC’s ability to carry out future investigations into offences under the securities laws.

The decision was made following civil proceedings that the SC commenced at the Kuala Lumpur High Court in 2010 against Datuk Ishak Ismail for alleged breaches of the securities laws.

After the initial suit was filed, Ishak made an application to the High Court for an order that the SC disclose documents and witness statements pertaining to SC’s investigation against him.

The Court of Appeal in affirming the earlier decision of the High Court ruled that statements made by persons to the SC under section 134 of the Securities Commission Act 1993 must be disclosed in civil proceedings.

The SC then appealed to the Federal Court against the decision.

Meanwhile, in a separate statement, the SC said the Court of Appeal had on Tuesday allowed the SC’s application to strike out the suit filed by Crowe Horwath and two of its partners, Onn Kien Hoe and Lee Kok Wai.

The SC appealed against the decision of the High Court in dismissing SC’s application to strike out the suit filed by the Crowe Horwath and its partners seeking protection under the Whistleblower Protection Act 2010 (WPA).

In the Court of Appeal, SC submitted that its application to strike out the suit should be allowed as there was an abuse of the court process given the initiation of multiple proceedings including four judicial review applications, to resist the Audit Oversight Board’s enforcement action against Lee Kok Wai and that the three parties are not entitled to the protection under the WPA.

Crowe Horwath and its partners initiated the action after the Audit Oversight Board (AOB) reprimanded and imposed a penalty of RM50,000 on Lee Kok Wai for failure to comply with the International Standards on Auditing in respect of an audit on the financial statements of Silverbird Group Bhd for the financial year ended Oct 30, 2010.

The Court of Appeal unanimously held that there were merits in the SC’s appeal and ordered the three parties to pay costs to SC.

Resource : The Star Online