MEGAN MEDIA

(MMHB)
ACCOUNTING
SCANDAL
By Safia Abdullahi (TP050391)
Lyudmila Pak (TP032172)
Azka Mohamed (TP052097)
MEGAN MEDIA
 Megan Media was established in 1994

 The principal activity of the company and its subsidiaries is the manufacturing and marketing of
electronic data storage products, such as diskettes, video tapes, and recordable compact discs.

 It has become the first Malaysian company to receive pioneer status from the Ministry of International
Trade and Industries for manufacturing magnetic and optical data storage products.

 On August 8, 2000, MMHB was listed onto the Second Board of the Kuala Lumpur Stock Exchange.
FAKE REVENUE REPORTS TO
BURSA MALAYSIA

 Based on the above figures, a large amount of its past revenue has been falsified, so its failed to submit
its regularization plan to Stock Exchange

 For the financial year ending in 2007, the company had incurred a net loss of RM 1.27 billion and a
negative cash flow of RM 897 million.

 Therefore, the company could not survive as its financial health had deteriorated and it was delisted in
April 2008
• Quick Ratio and Short Term Cash Adequacy shows a tight cash flow and current
assets might not be sufficient to cover the debts.

Interest coverage in 2007 is negative 24.12 which means the company is burdened by
debts

ROCE is negative 928.70% in 2007

HOW THEY WERE FOUND
OUT?
 MMHB’s woes surfaced in early May when its two subsidiaries –
Memory Tech Sdn Bhd and Singapore-based MPL – defaulted on a
RM47 million payment to bondholders.

 Megan Media appointed Ferrier Hodgson MH Sdn Bhd as investigative

accountant for wholly-owned subsidiary Memory Tech Sdn Bhd.

 A preliminary report on MTSB by a group of private forensic

accountants of FH Company revealed "substantial irregularities" and that

the company's financial position had been “materially misstated”.
 FORENSIC ACCOUNTING

RESULTS:
A RM211mil deposit paid for 13 production lines that could be fictitious.

 Fictitious trading that resulted in receivables totaling RM334.3mil.

 Payments to all trading creditors were actually made to other parties in an attempt to

channel cash out of MTSB.

 MMHB reported an unaudited loss of RM1.3 billion for its fiscal year ended April

2007 from a profit of RM60 million the year before.

 MMHB's total equity stands in deficit to the tune of nearly RM797 million and its net

liability per share is nearly RM4 compared to a net tangible asset per share of
RM2.31 in FY 2006.
CONSEQUENCES
• Company delisted from Bursa Malaysia
• The shareholder loss can be examined by seeing a drop of 85% of the company share price
over the period of three months after the news become known to the public (from as high
as RM0.60 to RM0.04).
• Former Megan Media Holdings Bhd executive chairman and
director Datuk Dr Mohd Adam Che Harun has been sentenced to 18 months in jail for
providing false revenue figures to Bursa Malaysia Securities Berhad.
• Sessions Court judge Zulqarnain Hassan also fined the 74-year-old Adam RM300,000 in
default one year’s jail
• SC has also obtained a warrant of arrest against George Yeo Wee Siong who was the
executive director of MMHB at the material time.
THANK YOU!