Soh Chee Wen's lawyer today claimed that the words in the two charges against the high-profile businessman are confusing and did not provide sufficient information to clearly describe his direct involvement in the alleged wrongdoings.

Counsel Francis Ng Aik Guan is requesting the Shah Alam Sessions Court to summon the prosecution to amend the charges or provide further information to the charges against his client.

Soh is facing two charges of allegedly defrauding the now defunct brokerage, Omega Securities Sdn Bhd, of RM521 million under Section 87A(a) of the Securities Industry Act 1983.

In his submission before Justice Suraya Othman, Ng told the court that his client had earlier stated that he was not sure how he is linked to the two charges against him in his affidavit.

The businessman is accused of using a scheme to defraud Omega Securities through the execution of direct transactions involving "crossings" in its margin accounts which did not involve any change in the beneficial ownership of the shares.

Soh allegedly had direct involvement with the purchase of 35,563,000 units of Uniphoenix Corporation Bhd shares through the margin accounts in Omega Securities.

This eventually led to the withdrawal of almost RM425 million from Omega Securities when the margin equity of the firm's margin account was below 150 percent, which contravened Rule 20(20) of Kuala Lumpur Stock Exchanges Rules for Trading by Member Companies.

As a result, Omega Securities was left with insufficient collateral to finance the margin accounts.

The second count is using a scheme to defraud Omega Securities through the execution of "contango transaction" in the margin accounts which eventually led to the withdrawal of sales proceeds amounting to more than RM94 million from Omega Securities.

Confusing definitions

Soh claimed the statement pertaining to the nature of his involvement in the transactions is unclear, especially the definitions of "crossings" and "contango transactions" which were not sufficiently explained in the charges.

"I am rather confused as to their exact definitions from the legal point because I was informed that there is no official definition under the Securities Industry Act 1983," he said in his affidavit.

Presenting Soh's affidavit to the court, Ng said his client "has clearly averted to his state of mind which is a confused state of mind".

According to the lawyer, "crossings" are transactions which should involved two sets of accounts from two different companies. However, the first charge against Soh only refers to the accounts from Omega Securities

"Isn't this confusing, your honour? How are we to prepare our defence and meet the prosecution's evidence as it unfolds?" he asked.

Meanwhile, the search for the meaning of "contango" yielded different definitions which only added to the confusion, the lawyer said.

For example, the Oxford Dictionary defines contango as "the former practice of carrying the purchase of stocks and shares over from one account day on the London Stock Exchange to the next", he told the court.

However a financial glossary obtained from the website of international investment firm, Credit Suisse, said it is a situation where prices are higher in the forward delivery months than in the nearby delivery months, he added.

Money withdrawn

Ng also told the court that the prosecution should shed some light on how the money was withdrawn from the accounts in Omega Securities and the beneficiaries.

According to him, the second charge has "peculiar wording", particularly on the sale of shares through "contango transaction" leading to the withdrawal of more than RM94 million from the margin accounts in Omega Securities

"When the sale is conducted through a stockbroker, money should be coming in," he argued.

"Then how does the sale of shares through contango transaction caused the withdrawal? We are seeking how this money is withdrawn and if it is withdrawn, then it is to who?"

Today is the second day of the hearing.

On Monday, Soh's lawyer applied to inspect various documents held by the Securities Commission to assist his defence. This is being challenged by the prosecution team led by Deputy Public Prosecutor Abdul Karim Abdul Jalil.

Soh, currently free on bail, faces a minimum penalty of RM1 million and a jail term of 10 years upon conviction.

The businessman was a former business partner of Ling Hee Liong, the son of Transport Minister Dr Ling Liong Sik until their business venture in Promet Bhd and Rekapacific fell apart when the recession hit in 1998.