DAP: KPMG has failed Malaysians

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KUALA LUMPUR: Global auditor KPMG has failed Malaysians, said the DAP, following the latest expose by whistleblower site Sarawak Report which published documents allegedly showing that the firm cooked the books when auditing 1Malaysia Development Bhd (1MDB).

DAP national publicity secretary Tony Pua said Sarawak Report provided the strongest evidence that KPMG was “complicit” in covering up the joint venture between the debt-ridden strategic investor and PetroSaudi Holdings in the former’s March 2010 financial statements.

He said it was peculiar as KPMG said on its website that it is a place where auditors pride themselves on acting with “integrity” and strive to uphold the “highest professional standards, provide sound advice and rigorously maintain our independence”.

He added that KPMG partner Ahmad Nasri Abdul Wahab said he conducted the necessary “assessment of risks of material misstatement of the financial statements whether due to fraud or error” when signing off 1MDB’s financial statements.

“But in this case, KPMG has clearly failed to act with any integrity in this audit exercise and did not act with the necessary independence.”KPMG was 1MDB’s auditor between 2010 and 2012, and signed off the company’s financial statement ending March 31, 2010, on Oct 4 the same year.

Sarawak Report said evidence showed “unacceptable and unethical practices”, which included actively conspiring to backdate documents referred to in the audit report, as well as intervening to retrospectively alter agreements which had previously been signed by 1MDB.

Pua, who is among 1MDB’s staunchest critics, cited an email dated May 22, 2010 between 1MDB’s chief investment officer Nik Kamil and PetroSaudi chief executive officer Patrick Mahoney on the relevant transaction documents.

The email allegedly states: “3. Letter of Agreement to purchase shares — all okay, except Auditors want a change in clause 5.9. Conceptually, they say that they will only clear the audit if the ‘proportionate reduce [sic] in guarantee’ is satisfied by either a ‘proportionate conversion of the shares’ or payment in ‘cash’. Attached is the draft which they had proposed which I have not sent to our lawyers as it is better that you deal with it.”

The Sarawak Report expose, Pua added, revealed details which point towards a highly elaborate scam to siphon off money from 1MDB. Prime Minister Datuk Seri Najib Razak has ordered the Auditor-General to look at 1MDB’s books, saying that the  report will be passed  to the  bipartisan Public Accounts Committee. — The Malaysian Insider

 

This article first appeared in The Edge Financial Daily, on March 23, 2015.