Was Deloitte Malaysia misled by 1MDB to be let off the hook?

Tony Pua asks why financial auditors accepted at “face value” the promise of the full US$1.23 billion redemption by end November 2014?

PETALING JAYA: DAP National Publicity Secretary Tony Pua is asking if officials at 1 Malaysia Development Berhad deliberately misled financial auditors Deloitte Malaysia into signing off the 2014 financial report on the basis that the US$1.23 billion in the Cayman Islands would be returned in full before November 2014.

In a statement, the MP for Petaling Jaya Utara said, “If not for the promised receivable of US$1.23 billion, 1MDB would not have passed the ‘liquidity risk’ test as the Company is expected to fully repay a RM2 billion outstanding loan by the end of November 2014.”

He said 1MDB in making this promise, avoided being questioned by the auditors, resulting in Deloitte Malaysia letting them off the hook with a simple disclaimer instead that said it was unable to verify for certain the valuation as disclosed in the financial report.

“Hence it also needs to be asked if Deloitte Malaysia performed sufficient due diligence on the investment in Cayman Islands” resulting in them accepting at “face value” the promises of officials at 1MDB instead.

Pua also said he would not back down from asking questions about 1MDB’s dealings despite the company expressing “regret that third party individuals” were making speculative statements concerning 1MDB’s decision-making process.

He asked, “How do you honestly expect the financial and investment community, the media as well as Malaysians at large, not to ‘speculate’ on what is happening when a wholly-owned subsidiary of the Ministry of Finance which has rapidly accumulated in excess of RM42 billion of debt has been unable to repay a RM2 billion debt which was due in November last year?”

Insisting that Chairman of 1MDB Lodin Wok Kamaruddin “explain and be accountable” as to why there is no trace of the promised funds, Pua asked if a new decision had been made by the 1MDB Board of Directors to suspend the “clear directive and authorisation by the 1MDB Board of Directors” to delay the redemption of the Cayman funds indefinitely.