Saudi market regulator confirms fines, jail terms in MMG case

Jail terms and a SR1.6 billion fine were among the penalties confirmed in the case of financial irregularities at Saudi building contractor Mohammed Al-Mojil Group (MMG).
Nine defendants including accountancy firm Deloitte were named in the final ruling by the local market regulator on Thursday.
The Capital Market Authority (CMA) said in the ruling that it is imposing various penalties over “illegal profits” and other irregularities during the builder’s initial public offering (IPO).
Penalties include a sanction of SR1.62 billion against Mohammed bin Hamad Al-Mojil, former chairman of MMG’s board, over “illegal profits” connected with the IPO. He is also subject to a five-year prison term, separate SR300,000 fine and a ban from working in listed companies for 10 years.
Adel Al-Mojil had his SR300,000 fine confirmed, along with a five-year jail term and 10-year ban on working in listed companies.
Adel Al-Mojil and his father Mohammed were earlier found guilty of manipulation and fraud related to the MMG’s IPO in 2008, a decision the company earlier said was based on “fundamentally flawed” evidence.
Upon the initial ruling in June 2016, the Al-Mojil family told Reuters they “were not given an opportunity to respond to certain of the evidence used against them”.
A statement published on the CMA’s official website names nine defendants involved in the case — including board members, senior executives and Deloitte — for violating articles of the Capital Market Law and Market Conduct Regulations.
It follows a final ruling reached Wednesday by the Committee for the Resolution of Securities Disputes (CRSD), following an initial decision made on June 18, 2016.
It centers on “practices that created a misleading and incorrect impression regarding the value of Mohammed Al-Mojil Group Company’s security during the IPO stage of the company’s shares.”
The rulings prevent Deloitte and Baker Bin Abdullah Abu Al-Khair from providing any legal accounting in Saudi Arabia for two years, in a ban that started in June 2015.
When contacted by Arab News on Thursday, Deloitte & Touche Bakr Abulkhair & Co. said they are set to resume external audit services in Saudi Arabia from June 2017.
“The final ruling concluded that Deloitte & Touche Bakr Abulkhair & Co. can resume external audit services to CMA-regulated entities in Saudi Arabia from June 1, 2017,” a statement said.
“The Firm appreciates the… Saudi Capital Market Authority’s role in regulating the Saudi capital markets. The Firm reiterates its commitment to work with all regulatory bodies in Saudi Arabia towards a first rate capital market in the Kingdom.”
The CMA statement added that a separate case against violations at MMG would be considered later.
“CMA clarifies to the public that the decision convicts the defendants of the violations committed during the IPO stage; CRSD has not considered the violations occurred after the IPO regarding manipulating the company’s financial statements, as such violations will come in a separate case files before the committee,” it said.
The 11 rulings confirmed on Thursday are:
1. Mohammed Bin Hamad Bin Abdulkarim Al-Mojil: Fined SR300,000, a five-year jail term upheld, obliged to pay SR1.62 billion to the CMA’s account for “illegal profits achieved as a result of these violations”, and banned from from working in listed companies for 10 years.
2. Adel Bin Mohammed Bin Hamad Al-Mojil: Fined SR300,000, imprisoned for five years, banned from working in listed companies for ten years.
3. Fahad Bin Ali Bin Saad Al-Raqtan: Fined SR300,000, imprisoned for three years, banned from working in listed companies for seven years.
4. Jassim Bin Mohammed Bin Ali Al-Ansari: Fined SR300,000, banned from working in listed companies for five years.
5. Abdullah Bin Mohammed Bin Saad Al-Hariqi: Fined SR300,000, banned from working in listed companies for five years.
6. Zaki bin Mansour Bin Ahmed AbuAlsaud: Fined SR300,000, banned from working in listed companies for five years.
7. Ahmed Bin Nasser Bin Yaqoub Al-Suwaidan: Fined SR300,000, banned from working in listed companies for five years.
8. Deloitte authorization no. (96) issued by SOCPA: Fined SR300,000, prevented from providing any legal accounting for authorized persons or any securities’ issuer for a period of two years, in a ban starting in 2015.
9. Baker Bin Abdullah Abu Alkhair: Fined SR300,000, banned from providing any legal accounting for authorized persons, or any securities’ issuer for a period of two years, in a ban starting in 2015.
10. Maintaining the confinement and the travel ban on the first defendant, Mohammed Bin Hamad Bin Abdulkarim Al-Mojil, until the repayment of all amounts under this decision.
11. Maintaining the travel ban of the second defendant, Adel Bin Mohammed Bin Hamad Al-Mojil, until the repayment of all amounts under this decision.

Source : Arab News