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Friday, July 29, 2016

THE CURSE OF THE NAJIB FAMILY: DELOITTE TO BE 'EN-RONED'? HAVING THE PM's SON ONBOARD MAY END IN DELOITTE'S DEMISE

THE CURSE OF THE NAJIB FAMILY: DELOITTE TO BE 'EN-RONED'? HAVING THE PM's SON ONBOARD MAY END IN DELOITTE'S DEMISE
DOJ info would have impacted 1 MDB audit, Deloitte says. Deloitte admits it missed billions in fraudulent transactions. Msian partnership might take international firm the way of Arthur Andersen.
Looks like Deloitte will join KPMG:
A new verb, "Enron-ed" was coined by John M. Cunningham, the former Arthur Andersen Director in the Seattle Office, to describe the demise of Arthur Andersen.
KPMG International ,the Swiss Cooperative under which KPMG partnerships worldwide come together to offer audit and other services under the direction of a Global Executive Leadership Team, has found itself entangled in Malaysia's 1 MDB sovereign wealth fund scandal.
It appears that in managing the crisis it now faces, KPMG may be managing its 1 MDB documents in a manner similar to Arthur Andersen and its documents related to the Enron assignment which led to the effective demise of that firm which was once considered the gold standard in auditing.
The Sarawak Report website that has in recent weeks published 1 MDB emails that reveal gross financial impropriety, recently published email correspondence between 1 MDB and its former auditor, the KPMG partnership in Malaysia,where KPMG has been shown to provide directions on how 1 MDB's books should be re- presented in order to receive an unqualified audit opinion.
1MDB is now unable to repay its loans worth USD 10 billion and counting, and it is likely that the company will be liquidated, with its debts assumed by the Malaysian Government which has effectively guaranteed 1 MDB's borrowing.
Nizar Najib, a director in Deloitte Malaysia, has been accused of conflict of interest due to his father's role in 1MDB
KPMG International has been queried about its potential liability for the possible if not probable civil and criminal claims arising from the 1 MDB scandal, and its general counsel Tom Whetered has insisted that the Cooperative offers no client services and has nothing to do with 1 MDB.
However that is a denial based on form for everything in substance says otherwise. To begin with, KPMG International counts as its revenue fees from the Malaysian partnership,and that will include fees from the 1 MDB assignment. In fact its recently retired chairman , Michael Andrews, identified Malaysia as a target market for growth when he took on that role.
Then the Singapore managing partner Sai Choy Tham, who is also a member of KPMG International's Global Executive Team , is also Regional Head of Audit, South East Asia. Mr Tham has been queried about his communication with the KL office with regards the 1 MDB emails revealed by Sarawak Report,and has been asked specifically if communications in the past weeks has included directions about the management of 1 MDB documents. He has refused to confirm or deny that he has issued directions in that regard, in his capacity as Regional Head Of Audit and member of the KPMG Global Executive Team.
The queries put to Mr Tham were also put to KPMG International chairman John Veihmeyer, who has also chosen to remain silent.
Meanwhile ,KPMG's partners in Malaysia have , in response to the Sarawak Report expose, insisted that all they have done they have done in accordance with international accounting standards.
Each of the Big 4 has its own auditing procedures that are considered proprietary, and in insisting that the 1 MDB audit was executed in accordance with international standards the partners in Malaysia are really saying that they have acted in accordance with KPMG International's established norms and procedures.
Put in another way, the Malaysian partners are insisting that they have acted as directed by KPMG International, even as KPMG International seeks to distance itself from them. - END
37 comments Published Today 11:57 am Updated Today 12:57 pm
Deloitte Malaysia said its audit of 1MDB in 2013 and 2014 would have been impacted if it had known at that time the information contained in the United States Department of Justice's (DOJ) lawsuits to seize 1MDB-linked assets.
As such, 1MDB's 2013 and 2014 financial statements, which the auditing firm signed off on March 28, 2014 and Nov 5, 2014, "should no longer be relied upon", it said in a statement.
"The complaint (filed by DOJ) contains information, which, if known at the time of the 2013 and 2014 audits of 1MDB, would have impacted the financial statements and affected the audit reports and, accordingly, those audit reports issued by Deloitte Malaysia dated March 28, 2014 and Nov 5, 2014 respectively in connection with the 2013 and 2014 financial statements of 1MDB should no longer be relied upon," Deloitte said in a statement.
This comes after 1MDB announced that Deloitte is quitting as 1MDB's auditor, making it the third audit firm to part ways with 1MDB since its inception in 2009.
Deloitte notified 1MDB of its intention to quit in February, the state investment said in a statement yesterday.
Deloitte remains 1MDB auditor until a replacement is appointed, 1MDB said.
1MDB's accounts from 2010 to 2012 were audited by KPMG, but the firm's services were terminated in December 2013.
According to the Public Accounts Committee report on 1MDB, KPMG was fired after it refused to sign off on the accounts without details of investments worth US$2.32 billion.
KPMG signed off on the accounts after Abu Dhabi's International Petroleum Investment Compny guaranteed an investment, the PAC report said.
The Wall Street Journal reported another audit firm Ernst & Young was fired in 2010 for raising similar questions.
The DOJ is seeking to seize more than US$1 billion of assets it said were purchased using funds siphoned from 1MDB.
The 1MDB board yesterday said it is confident of no wrongdoing.
However, it is taking precautionary measures by discounting its 2013 and 2014 financial statements until the DOJ lawsuits have been dealt with in court. - http://sahathevan.blogspot.my/

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