A current partner and two former auditors of Deloitte have gone to court to challenge the Malaysian Institute of Accountants’ (MIA) probe against them in relation to the audit of 1MDB for 2013 and 2014.
Deloitte PLT partner Mark Evelyn Thomson and two of the international audit firm’s former auditors, Tan Theng Hooi and Cheong Thoong Farn, filed the judicial review application on Dec 4 last year.
The trio named MIA’s Investigation Committee (IC), the institute’s Disciplinary Committee (DC), and MIA itself as the three respondents.
According to cause papers sighted by Malaysiakini, the trio’s legal representatives, law firm Messrs Weng & Co, filed the legal action at the Kuala Lumpur High Court.
The three applicants seek to quash the IC’s decision on Sept 7 last year, to refer complaints against the trio to the DC.
The complaints are in relation to the trio’s alleged failure to check whether the audited accounts of 1MDB for 2013 and 2014 needed amendment, following their alleged coming to know of certain alleged facts linked to the sovereign wealth fund, after the accounts have been audited.
Among the alleged facts was the failure of 1MDB to make successive loan repayments and extensions of the loan due dates; its failure to redeem investments in the remaining units of the SPC Fund registered at the Cayman Islands; and the conclusive abortion of the sovereign wealth fund's public listing of electricity generator Edra, where it has power assets.
Another of the alleged facts was a statement by Abu Dhabi’s International Petroleum Investment Co (Ipic) and Aabar Investments PJS on the London Stock Exchange dated Apr 11, 2016, regarding Aabar Investments PJS Limited not being an entity within the corporate group of Ipic and Aabar Investments.
The trio claimed the complaints were over their alleged non-compliance with paragraphs 14 and 17 of the MIA’s International Standard of Auditing (ISA) 560 Subsequent Events.
Paragraph 14 states that if after financial statements have been issued, that a fact becomes known to the auditor that would have necessitated an amendment to the audit report, the auditor needs to discuss with the auditee to see whether the financial statements need amendment.
Paragraph 17 states that if the auditee fails to amend the financial statements even after the auditor has discussed with them, then the auditor shall take appropriate action to prevent reliance on the auditor’s report.
The three judicial review applicants claimed that during a hearing before the IC on June 18, 2020, the trio informed it that the complaints should be dismissed on the grounds of res judicata and abuse of process, among others.
The Latin legal maxim res judicata refers to a matter that has been adjudicated by a competent court or tribunal and thus should not be pursued further by the same parties.
The trio claimed however that via letters dated Sept 7 last year, the IC informed them that there is a case to answer in relation to the complaints and that the IC would refer the matter to the DC.
They claimed that the IC provided no reasons for the decisions.
The trio claimed that the IC’s decisions were tainted by bias and/or conflict of interest, violated their right to equal treatment and due process, suffered from procedural impropriety, and were irrational and unreasonable, among others.
Deloitte was among several top accounting firms that were appointed by 1MDB at one point or another.
In 2016, Deloitte PLT had disavowed its 2013 and 2014 audits of 1MDB.
In 2019, Deloitte became the first accounting firm to be sanctioned. It was fined RM2.2 million by the Securities Commission for alleged failure to report irregularities involving a RM2.4 billion bond issued by 1MDB.
Deloitte later went to court to overturn the fine. However on Dec 24 last year, the Kuala Lumpur High Court dismissed the legal challenge.
The MIA is a statutory body that regulates the accounting profession under the Accountants Act 1967, among others.
On Oct 16, 2019, it was reported that Deloitte partner Ng Yee Hong filed a legal challenge against MIA in relation to the signing off of 1MDB’s accounts for 2014. - Mkini
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