CMA convicts, fines several Saudi German Health board members, audit committee over manipulation

Logo of Middle East Healthcare Company (Saudi German Health)

The Capital Market Authority (CMA) announced the issuance of a final decision by the Appeal Committee for the Resolution of Securities Disputes' (ACRSD) against 11 violators for breaching Article 49(a) of the Capital Market Law and Article 7 of the Market Conduct Regulations.

The violations involved manipulating the financial statements of Middle East Healthcare Company (Saudi German Health) for the period from 2018 to 2021. The violators were collectively fined approximately SAR 18 million for these offenses.

According to the ACRSD ruling, several members of the board of directors and audit committee were convicted, including Sobhi Abdeljalil Ibrahim Batterjee, Makarem Sobhi Abdeljalil Batterjee, Sultan Sobhi Abdeljalil Batterjee, Khaled Abdeljalil Ibrahim Batterjee, Mohammed Abdulrahman Mohammed Moumneh, Ahmed Mohammed Khaled Abdulrazzaq Al-Dahlawi, Ali Abdulrahman Abdullah Al-Quwaiz, Amr Mohammed Khaled Khashoggi, Mohammed Mostafa Ibn Mohammed Omar Bin Siddiq, Waleed Abdulaziz Abbas Ahmed Saleh Kayyal, and Saleh Ahmed Ali Hafni.

They were found in violation of Article 49(a) of the Capital Market Law and Article 7 of the Market Conduct Regulations for, in their capacity as board members and audit committee members of the company, inflating the company’s revenues and creating a false and misleading impression regarding its book value.

This was done through the recognition of unjustified gross revenues amounting to SAR 358 million, despite the board of directors and audit committee being aware of the weak likelihood of collecting those revenues. As a result, false information was recorded in the company’s financial statements covering the period from 2018 through the interim financial period ended Sept. 30, 2021. This had affected the company’s assets, misrepresented its financial statements, and inflated its revenues.

The committee’s ruling included a fine of SAR 3.1 million against Makarem Sobhi Abdeljalil Batterjee.

It also imposed fines of SAR 2.1 million each on Sobhi Abdeljalil Ibrahim Batterjee, Sultan Sobhi Abdeljalil Batterjee, Khaled Abdeljalil Ibrahim Batterjee, and Mohammed Abdulrahman Mohammed Moumneh.

In addition, Ahmed Mohammed Khaled Abdulrazzaq Al-Dahlawi was fined SAR 1.98 million, Ali Abdulrahman Abdullah Al-Quwaiz (SAR 1.08 million) and Amr Mohammed Khaled Khashoggi (SAR 1.6 million).

These individuals were also banned from working in entities regulated by CMA for one year.

The ruling also included a SAR 500,000 fine against Mohammed Mostafa Ibn Mohammed Omar Bin Siddiq, a SAR 580,000 fine against Waleed Abdulaziz Abbas Ahmed Saleh Kayyal, and a fine of SAR 680,000 against Saleh Ahmed Ali Hafni.

They were also banned from working in entities supervised by the CMA for six months.

The final decisions of ACRSD came as a result of joint coordination and cooperation between CMA and the relevant concerned authorities, and in light of the public penal lawsuit filed by the Public Prosecution, referred to it by CMA, against the investors for violating the Capital Market Law, said the regulator.

CMA also stressed the importance of investors' confidence in the capital market for its growth and prosperity. The CMA continuously monitors any violating behaviors, identifies the perpetrators, and processes the necessary procedures to impose deterrent penalties against them, in order to enhance the CMA's efforts aimed at creating an attractive investment environment and ensuring it is safe from unfair or unsound practices or those that involve fraud or manipulation.

The General Secretariat of the Committees for Resolution of Securities Disputes (GS-CRSD), from its side, announced that any person affected by these violations is entitled to file a compensation claim (as individual or class action) against the convicted persons with the CRSD for the damage incurred due to these violations.