KUALA LUMPUR: The Securities Commission (SC) charged former director of LFE Corp Bhd Alan Rajendram Jeya Rajendram yesterday with securities fraud and eight other offences allegedly committed when he was a director of the company.

A statement from the regulator said the charges against Alan Rajendram, 53, were the latest in a string of enforcement actions by the SC against alleged corporate fraud and misconduct. Alan Rajendram is also a former director of Linear Corporation Bhd, which is embroiled in the controversial “King Dome” saga and was classified as a PN17 company on Wednesday.

The SC said Alan Rajendram was charged under section 87A(b) of the Securities Industry Act 1983 for “committing an act that operated as a fraud” on LFE by using RM9 million of LFE’s monies to finance the purchases of the company’s shares pursuant to a private placement and restricted offer to him.

It said the act was alleged to have been committed between Jan 4, 2007 and Feb 8, 2007, adding that the former director would be liable to a fine of not less than RM1 million and imprisonment not exceeding 10 years if convicted.

Alan Rajendram being led by a policeman at the Duta Court here yesterday. Photo by Suhaimi Yusuf

The SC noted that Alan Rajendram also faced two other charges under section 122B(b)(bb) of the Securities Industry Act and another two charges under section 369(b)(B) of the Capital Markets and Services Act 2007 for “knowingly permitting the furnishing of false statements” by LFE to Bursa Malaysia. The regulator stressed this was in relation to LFE’s unaudited financial results for all four quarters of its financial year ended Dec 31, 2007.

Apart from the securities law breaches, the SC said Alan Rajendram was also charged with criminal breach of trust under section 409 of the Penal Code, of a further RM9.99 million of LFE’s monies and another three charges for abetting two LFE directors in cheating EON Bank Bhd of RM3.96 million.

The regulator pointed out the charges involved the supply of fictitious documents to enable the “drawdown” on LFE’s banking facilities.

The former director pleaded not guilty to all nine charges at the Sessions Court yesterday.

LFE’s share price yesterday rose two sen to close at 18.5 sen with 55,300 shares done.

Alan Rajendram had been in the limelight lately following his resignation as a director of Linear Corp Bhd on May 18, 2010 in relation to the little-known RM1.66 billion King Dome project in Manjung, Perak that was awarded by Seychelles-based Global Investment Group Inc (GIG).

Linear’s shares soared on the announcement. It was later discovered that the company had transferred almost all its cash reserves of RM36 million to GIG, prompting Linear’s new board to question its recoverability as well as the King Dome project itself. 

The company, which manufactures cooling systems, was classified as PN17 status on Wednesday due to “default in payment” and was “now unable to provide a solvency declaration”.

Linear had said in a filing to Bursa Malaysia earlier this week that Alan Rajendram had on June 17, signed a statutory declaration and letter of indemnity, undertaking to “deliver” the King Dome project to Linear, to “indemnify” Linear in the event of any loss including refund of the cash advanced, and take over the ‘Letter of Award’ at cost from the company in the event it does not proceed.

In its latest filing to Bursa Malaysia yesterday, the company said Alan Rajendram had on May 18 informed the board he had held discussions with officials from Johor on the possibility of siting the King Dome project in the southern state.

“Apart from this, the board has not held any discussion on this matter,” said Linear with regard to the query from the exchange on several issues.

Linear’s shares yesterday closed three sen lower at 17 sen with 7.28 million shares traded. Its shares traded as high as 70 sen at the end of last year, after the King Dome project announcement.