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Hi Andy, here are some thoughts I have: 

Razor99, a short-seller is accusing Silverlake Axis using sophisicated corporate structure and related party transaction to ‘potentially’ hide any debts and loss-making companies under his personal holdings (not listed) so Goh can inflate the reported earnings on his list co and ultimately, profiting from minority shareholders by selling his shares to them. 

Two subsidiaries, for example, were brought up to light on how Goh pump up their financials before injecting it to the list-co (to sell high) and after three years, these entities will perform badly. Why leaves traces behind if Goh was intentionally manipulating those accounts? By stating this simple fact, the accusation on fictitious account becomes a mystery to me. 

The report also detailed down how other dubious related party transactions were carried out. In nutshell, the examples  in the report were shown to prove author’s two main points; create fictitious accounts and take advantage of minority shareholders. I chose to believe the latter as from my own observation, Goh has been trying to cash out his stake progressively, a sign of misalignment of interest. The author captures the essence of it on the Section 6. The share placement in 2013 of RM241m was completely unnecessary and obviously, the author has the right to link it with the point he is trying to prove. 

Having said that, the manipulations remain possible as it’s within Goh’s control as a private entity to create fictitious accounts and whether it’s true, the authority need to access whether these accounts were transacted on arms length with the list-co. I’m not sure if the Audit Committee does check on all these? On its audit committee, John Lim and Ong Kian Min are frequent people we will see on listed companies such as Boustead, Food Empire, BreadTalk, LMA International and Pan-United. 

The author tries to link Silverlake with other fraudulent companies, i.e. Satyam and Longtop Financials. I looked through their past financing behaviour*, these two companies clearly had Enron-like characteristic; pay increasing dividends and frequently raising money from minority shareholders.  I do not see similar characteristic in Silverlake Axis** other than Goh cashing out from his personal stake. 

In fact, this saga offers us an opportunity to further strengthen the Capital Raised and Capital Returned process by taking into account of founder’s shares proceeds into calculation if the whole accusation turns out to be true. It’d be another high level fraud case by then. 

* Longtop raised a total sum of $276m and paid out approximately $69m. Satyam raised a total sum of Rs17.4b and paid out approximately Rs14b. 
** Silverlake Axis raised a total of RM275m  (inclusive share placement in 2013) and paid out RM731m since IPO.