📒 Quick Take: Serba Dinamik’s Castle of Illusion
I unpack the tricks used by the Malaysian energy services company to raise funds over the years.
The boss of Serba Dinamik Holdings, Mohd Abdul Karim Abdullah, has a history of being involved in false reporting across his companies.
On 12 March 2026, local media broke the news that the Securities Commission Malaysia had obtained an arrest warrant for the CEO of the Malaysian energy services company. However, The Edge clarified nearly two weeks later that the arrest warrant was issued over Karim’s alleged wrongdoing at Sarawak Consolidated Industries Bhd (SCIB), a manufacturer of precast concrete products.
Karim – the former chairman as well as the non-executive and non-independent director of SCIB – is wanted for an offence under the Capital Markets and Services Act for “his alleged involvement in causing SCIB to submit a false statement to Bursa Malaysia,” according to The Edge.
In 2021, Karim was charged for a similar offence in relation to false information in the financial statements of Serba, according to a statement by the Malaysian regulator. “The matter was however resolved via compound following the decision of the Public Prosecutor in accepting Karim’s representation, where he was imposed with a compound of RM 3 million.”
In short, Karim was previously charged five years ago for his work at Serba, but managed to get away with paying a fine of RM 3 million (USD 757,384). This time, he’s being pursued over a similar offence at SCIB and is currently at large.
The Game
How did Serba fool lenders including banks and offshore bondholders over the years, before its auditor KPMG blew the whistle in May 2021?
I wrote last week that Serba had parallels with Indonesian textile company Sri Rejeki Isman (Sritex), which was also accused of deceiving its creditors and officially shut down last year.
Across various sectors and countries, the common pattern is to raise money from investors or lenders by making them believe that more money will be made down the road, even though the underlying business is not generating enough cash. In short, the game is to create and maintain the illusion of a real business.
There are two ways to do this:
Convince lenders that the proceeds will be used to make something or provide services that will be taken up by customers.
Set the musical chairs in motion by lining up other lenders to refinance existing creditors.
The Toolkits
Perpetrators may use different toolkits that fit into those two broad themes. In Serba’s case, its modus operandi can be boiled down into four categories:
🔸 Working Capital Management
Malaysian analyst Aaron Pek wrote in June 2021 that Serba’s working capital accounted for an “astonishingly high” percentage of operating cashflows and was consistently in the 80% range.
This meant that most of Serba’s operating cashflows were a function of its working capital management, rather than organic business inflows, he said.
🔸 Elevated Margins
Serba consistently reported operating profit margins of around 14-15% over a four-year period tracked by The Edge.
The managing director of a publicly traded oil and gas company told the Malaysian publication: “We in the industry were perplexed by the (high) margins that Serba was commanding, but of course it’s only on hindsight that everyone talks about these things, else the focus is on the share price, on capital gains.”
🔸 Questionable Transactions
In April 2020, Serba’s subsidiary signed a USD 1.78 billion contract with Block 7 Investments to build an innovation hub and related facilities in Abu Dhabi. Block 7 was supposed to be a joint venture between Serba and “startup investment company” EFIRE Capital Holdings, but all three were linked to Karim, according to public records and media reports. Serba did not disclose Block 7 as a related party.
Apart from collaborating with the Malaysian Space Agency to “strengthen the development of the space economy and industry in Malaysia”, Serba also sponsored a special purpose acquisition company (SPAC) called Data Knights Acquisition Corp, which planned to invest in data centers and IT companies, according to its press release in May 2021.
🔸 Overseas Foray
In late 2019, Serba issued a USD 200 million Islamic bond (sukuk) due 2025 to fund projects in Malaysia and Uzbekistan, as well as an EPCC (engineering, procurement, construction and commissioning) contract in Turkmenistan, according to its bond prospectus.