Conviction a Number of Board Members of Saudi German Health and its Audit Committee for Violating the Capital Market Law and Its Implementing Regulations by Manipulating the Financial Statements from 2018 – 2021 and Fining them Around SAR 18 Million
The Capital Market Authority (CMA) announces the issuance of a final decision by the Appeal Committee for the Resolution of Securities Disputes (ACRSD) against 11 violators, for violating Article (49.a) of the Capital Market Law and Article (7) of the Market Conduct Regulations, by manipulating the financial statements of Middle East Healthcare Company (Saudi German Health) during the period from 2018 – 2021, and fining them collectively approximately SAR 18 million for such violations.
In accordance with the ACRSD's decision, a number of the Company's board members and audit committee members were convicted, namely: Subhi Abduljalil Ibrahim Battrajee, Makarem Subhi Abduljalil Battrajee, Sultan Subhi Abduljalil Battrajee, Khalid Abduljalil Ibrahim Battrajee, Muhammad Abdulrahman Muhammad Mu'menah, Ahmad Muhammad Khalid Abdulrazzaq Aldahlawi, Ali Abdulrahman Abdullah Alquwaiz, Amr Muhammad Khalid Khashoggi, Muhammad Mustafa bin Muhammad Omar bin Siddiq, Walid Abdulaziz Abbas Ahmad Saleh Kayyal, and Saleh Ahmad Ali Hafni; of violating Article (49.a) of the Capital Market Law and Article (7) of the Market Conduct Regulations, for their act, in their capacity as members of the board of directors of Middle East Healthcare Company (Saudi German Health) and members of its audit committee, of inflating the Company's revenues and creating a false and misleading impression regarding its book value, by acknowledging undue total revenues that reached SAR 358,044,138, despite the knowledge of the Company's board of directors and audit committee of the low likelihood of collecting such revenues. This resulted in the inclusion of inaccurate information in the financial statements subject to the violation, extending from the financial year ending on 31/12/2018 till the initial financial period ending on 30/09/2021, which affected the Company's assets and caused its financial statements to be presented untruthfully and its revenues to be inflated.
The ACRSD's decision included imposing a fine on the convicted Makarem Subhi Abduljalil Battrajee in the amount of (3.1) million Saudi Riyals, and fines on the convicted: Subhi Abduljalil Ibrahim Battrajee, Sultan Subhi Abduljalil Battrajee, Khalid Abduljalil Ibrahim Battrajee, and Muhammad Abdulrahman Muhammad Mu'menah, in the amount of (2.1) million Saudi Riyals each, and fined the convicted Ahmad Muhammad Khalid Abdulrazzaq Aldahlawi (1.98) million Saudi Riyals, and fined the convicted Ali Abdulrahman Abdullah Alquwaiz (1.08) million Saudi Riyals, and fined the convicted Amr Muhammad Khalid Khashoggi (1.6) million Saudi Riyals, and banned them from working in entities under the supervision of the CMA for a period of one year.
The decision further included fining the convicted Muhammad Mustafa bin Muhammad Omar bin Siddiq (500) thousand Saudi Riyals, the convicted Walid Abdulaziz Abbas Ahmad Saleh Kayyal (580) thousand Saudi Riyals, and the convicted Saleh Ahmad Ali Hafni (680) thousand Saudi Riyals, and banning them from working in entities under the supervision of the CMA for a period of six months.
The CMA explained that the ACRSD's final decision came as a result of joint coordination and cooperation between the CMA and relevant concerned authorities, and in light of the public penal lawsuit filed by the Public Prosecution, referred to it by the CMA in March 2024, against the violator for violating the Capital Market Law and its Implementing Regulations.
The CMA stresses 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 for all categories of investors and safe from unfair or unsound practices or that involve fraud, cheating, misleading, deception or manipulation.
The CMA indicated that the GS-CRSD announced to the public on its website the identity of the violators after the violations and sanctions were proven and the final decision was issued by ACRSD. It can be viewed through the following link (Announcement link)
The GS-CRSD, from its side, announced that any person affected by the violations subject to this case is entitled to file a compensation claim (as individual or class action) with the Committee for Resolution of Securities Disputes (CRSD) for the damage suffered due to these violations, provided that this must be preceded by filing a complaint with the CMA in this regard via the following link: (Link to file a complaint).
Furthermore, the GS-CRSD will announce to the public on its website upon the filing of any class action, to enable other investors affected by the same violations to apply to the CRSD to join the class action.
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