Deloitte, KPMG under probe over 1MDB, says report

(Reuters pic)

PETALING JAYA: Two of the world’s largest audit firms, Deloitte and KPMG, are being investigated by the Securities Commission of Malaysia (SC) over their involvement in the 1MDB scandal.

Quoting sources, the South China Morning Post (SCMP) reported that the SC is looking into whether the two firms “were aiding and abetting in this scandal, or merely negligent”.

“The accountants must be held accountable,” the newspaper reported its source as saying.

The SC, however, remained tight-lipped when asked to confirm the investigation and only told SCMP that its review of the “conduct of auditors in relation to 1MDB audits is still ongoing”.

Deloitte and KPMG, according to the report, did not respond to requests for comment.

Deloitte was 1MDB’s third auditor, after Ernst & Young LLP and KPMG.

In 2016, Deloitte resigned as the financial scandal surrounding the debt-ridden state firm made headlines around the globe.

KPMG was responsible for the fund’s accounts for 2010, 2011 and 2012, while Deloitte managed the 2013 and 2014 financial statements.

In June last year, KPMG said the financial statements for the financial years ended March 2010, 2011 and 2012 did not provide a true and fair assessment of 1MDB.

In August of last year, it was reported that the Malaysian Institute of Accountants (MIA) was investigating the two firms. In November, it completed its probe on Deloitte and referred the case to its disciplinary committee.

SCMP went on to quote anti-graft activist Cynthia Gabriel as saying that the audit firms involved were “a party to the fraud”.

“The personnel involved should be duly punished. Evidence of wrongdoing has been produced – the auditor general’s report, the public accounts committee’s report.

“In fact, KPMG is working at nullifying the audit report 2011-2012,” Cynthia, who is the executive director of the Center to Combat Corruption and Cronyism, was reported as saying.

Sources also told SCMP that they believe that KPMG may be negotiating a deal with the Malaysian authorities. - FMT