Nur Jazlan questions loose rules, special treatment for 1MDB

MP calls for professional inquiry by accountants into standards being applied 'to the least' degree.

KUALA LUMPUR: Umno’s Nur Jazlan Mohamad has questioned the loose standards and special treatment given to troubled government-owned 1Malaysia Development Bhd, and called for accountants to launch a professional inquiry in addition to two inquiries by the government.

The management, board of directors and the auditors should be taken to task and made responsible for allowing such issues to cloud the accounts,” he said in a press interview.

Nur Jazlan, MP for Pulai and chairman of the Public Accounts Committee, said in the interview published today that he was personally “very surprised at the lax leeway given and the stretching of auditing standards by international firms handling the company’s affairs.

He also questioned the special treatment given to 1MDB, compared to other commercial companies and government-linked companies.

In the interview, with The Star’s business section, Nur Jazlan was asked about the Public Accounts Committee’s investigations into 1MDB, which began last week. A trained accountant, he was asked whether he was surprised by the state of 1MDB’s accounts and whether standards had been applied uniformly.

“The standards are there. The question is whether you want to apply them to the highest or the least degree. In this case, it was applied to the least,” he was quoted as saying. “It’s not like these firms are not reputable international companies. They have been auditing other listed companies. They should actually observe a higher standard.”

He said the change in auditors, from Ernst & Young to KPMG to Deloitte in six years, “does not give confidence that the accounts are of a high standard of assurance”.

He said the Malaysian Institute of Accountants, the professional body for accounting, should launch its own investigations.

“I have done a desktop review of the 2014 accounts of 1MDB without going deeper and have found that a few major accounting principles underlying the accounts dated March 31, 2014 may have been stretched to achieve the unqualified opinion,” he was quoted as saying.

1MDB has relied on the fact that the accounts were approved without qualification by the auditors as an indication that its affairs were above board.

The company has been mired in controversy for months following revelations of its reported RM42bn debts, questionable investments in a Middle Eastern joint venture, and its deposits in the offshore tax haven of Cayman Islands.

In the wake of relentless criticism, Prime Minister, Najib Razak, who is 1MDB’s chief adviser, has asked for an investigation by the bipartisan Public Accounts Committee, the parliamentary watchdog of government spending, in addition to a multi-agency investigation headed by the Auditor-General.

The scope of his committee’s inquiry is wider than that of the Auditor-General, who would examine financial management. “Our scope goes beyond that because it involves political issues that affect the Government’s image as well. An example is the allegations that have emerged. The AG might not take all that into account, but we have to,” he was quoted as saying.

“If there is something wrong, we will recommend that the Government takes action to remedy the situation and punish those responsible.”

The committee’s report would be tabled in Parliament and become part of public record. “We will be releasing it together with the Hansard,” he said.