KUALA LUMPUR (June 11): 1Malaysia Development Bhd (1MDB) denied today that its auditor Deloitte & Co had yet to begin auditing the accounts of the debt-laden firm, saying the audit of 1MDB’s subsidiary Edra Global Energy Bhd has commenced.

In a statement today, 1MDB president and group executive director Arul Kanda Kandasamy said the allegations made by DAP publicity chief and Petaling Jaya Utara MP Tony Pua that the Finance Ministry and company directors were refusing to allow Deloitte to audit 1MDB were “absolutely incorrect and untrue”.

“The board and management of 1MDB met Deloitte as early as February 2015 to discuss commencement of an audit after the financial year end of March 31, 2015,” said Arul.

“In fact, the audit of a major 1MDB subsidiary, Edra Global Energy Bhd, has already commenced and is well under way,” he added.

Arul also said the 1MDB Board has maintained a regular dialogue with Deloitte on the audit process and a further update will be issued when appropriate.

“1MDB is currently undergoing a thorough review and investigation of its accounts by the National Audit Department,” he said.

“(The) management time is fully focused on this, given the significant public interest to complete the review as soon as possible,” he added.

In a report by The Malaysian Insider today, Pua had said Prime Minister Datuk Seri Najib Razak must explain why Putrajaya had yet to direct Deloitte to audit the accounts of 1MDB, more than two months after its financial year ended.

Pua had alleged that the Finance Ministry and company directors were violating the Companies Act 1965 by “refusing to allow Deloitte” to begin auditing the debt-ridden state investment vehicle.

“In fact, under Clause 171(1), the Act dictates imprisonment for 5 years or RM30,000 ‘if any director of a company fails to comply or to take all reasonable steps to secure compliance by the company … has by his own willful act been the cause of any default by the company thereunder, he shall be guilty of an offence against this Act.’” Pua was quoted saying in a statement.

“Hence the Ministry of Finance and directors of the company are willfully flouting the law by refusing to allow Deloitte to commence the audit of the company, which will result in the failure by the company to submit its accounts by the Sept 30, 2015 due date,” he added.

Pua said that Clause 160(1) of the Act stated that a company’s audited report must be lodged within six months after the financial year ends.

The Edge Financial Daily had reported today that Parliament’s Public Accounts Committee (PAC) revealed that Deloitte was unable to verify if 1MDB’s investments, which were redeemed from the Cayman Islands and kept in BSI Bank Ltd in Singapore, were in cash, units or assets as it had yet to be given the green light by the Finance Ministry to audit 1MDB’s latest accounts for the financial year ended March 2015.

Further, PAC chairman Datuk Nur Jazlan Mohamed had also said that Deloitte is unable to verify if 1MDB’s “assets” parked in Singapore are still present, for the same reason.

However, Nur Jazlan had said according to Deloitte’s audit of 1MDB’s financials for financial year 2014 (FY14), when the auditor had viewed bank statements of 1MDB’s funds parked at BSI Bank in Singapore and other locations, it had verified that the fair value of these assets totalled RM13.4 billion at that point in time.

Arul and former 1MDB chief executive officer Datuk Shahrol Azral Ibrahim Halmi are expected to face the PAC in the first week of August, after Raya celebrations.

The PAC is also expected to summon 1MDB’s former auditor KPMG next week as the firm audited 1MDB’s 2011 and 2012 accounts.

Nur Jazlan had also reportedly said today that PAC will summon Bank Negara Malaysia to assist in the probe into 1MDB, as the latter has executive powers and the manpower to investigate the firm.

“If there is a need to call them, we will call them,” he had said.

On June 3, Bank Negara had said in a press statement that it had started a “formal enquiry” on whether 1MDB and its officers had breached rules and regulations, stating that the regulator is taking statements from individuals involved in the governance of 1MDB and obtaining information from other relevant parties, both domestic and international.