Chief financial officers of top firms in Malaysia were told today to be "squeaky clean", a month after controversy erupted over troubled air cargo firm Transmile.

"As accountants and advisers to your company, you have an important duty to ensure that financial statements can be trusted," deputy finance minister Ng Yen Yen told a gathering of CFO's in Kuala Lumpur.

Company accountants must be "squeaky clean (and) their integrity must be beyond reproach" Ng was quoted by the official Bernama news agency as saying.

Problems stemming from misleading financial statements can "severely undermine investor interest and public confidence and have far-reaching consequences on our capital market and country," Ng said.

Ng said the Malaysian capital market has grown to become one of the biggest in the region with more than 1,000 listed companies, with a volume close to RM1.5 trillion.

Ng cited as examples US energy and telecom firms Enron and WorldCom, as well as Malaysia's Transmile, whose executives were last month hauled to court for misleading information on its accounts.

Transmile fiasco

Among those charged were Gan Boon Aun, founder and chief executive of the firm until he resigned on June 19 and two others for abetting Transmile in making the misleading statement in the company's 2006 financial accounts.

The three face a minimum fine of RM1 million and up to 10 years in prison, or both, if convicted.

Transmile's problem began in May when it announced it failed to meet the deadline to submit audited financial statements for 2006.

The company subsequently had to restate previously announced net profits for 2006 and 2005 as losses after a special audit uncovered false statements of revenue and asset purchases going as far back as 2004.

Transmile's shareholders include Hong Kong-based Malaysian billionaire Robert Kuok, the Singapore government and national postal company Pos Malaysia, whose main shareholder is state investment arm Khazanah Nasional.