Four Serba Dinamik independent directors resign in protest over company's lawsuit against KPMG

Four Serba Dinamik independent directors resign in protest over company's lawsuit against KPMG
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KUALA LUMPUR (June 25): Five independent and non-executive directors of Serba Dinamik Holdings Bhd have resigned from the board, with four of them citing differences in opinion with the company over the latter's decision to take legal action against Messrs KPMG PLT, its external auditor who has since resigned following the lawsuit.

The five independent directors are — Rozilawati Basir, Sharifah Irina Syed Ahmad Radzi, Tengku Datuk Seri Hasmuddin Tengku Othman, Hasman Yusri Yusoff and Masleena Zaid, according to several Serba Dinamik bourse filings today.

But only Masleena, who was recently appointed to the board by the oil and gas services firm, cited "personal commitment" as the reason for her resignation.

Masleena was among three additional independent and non-executive directors that Serba Dinamik appointed to its board on June 14, following the company's dispute with KPMG over its audit issues. The other two were Datuk Mohamed Ilyas Pakeer Mohamed and Johan Mohamed Ishak.

Mohamed Ilyas was subsequently redesignated as chairman of the company's board on June 15, while then chairman Datuk Mohamed Nor Abu Bakar was made an independent director. Mohamed Nor then quit the board a few days later on June 19, citing personal reasons.

What the four independent directors say about their resignation

Below are the specific reasons each of the four protesting directors gave on why they are quitting the board: 

Hasman: Due to differences in opinion that he has with the decisions made by the Board which in his view are not to the best interest of the company.
Details of any disagreement: Company's decision to commence legal action against KPMG PLT

Tengku Hasmuddin: Due to differences in opinion on decisions made moving forward by the company in light of the current developments.
Details of any disagreement: Company's current decision on action against the auditor

Rozilawati: Disagree with the decisions of the board taken recently which is contrary with her view. The decisions were in her view not (in) the best interest of the company, stakeholders, particularly the minority shareholders. 
Details of any disagreement: Disagree with the decision to commence legal action against KPMG PLT

Sharifah Irina: Due to differences in opinion on decisions made moving forward by the Company in light of the current developments which is contrary to the best interest of the company and its stakeholders.
Details of any disagreement: Differences in opinion on company's decision moving forward with regards to KPMG PLT.

Serba Dinamik shares sink to new low

On Thursday (June 24), KPMG announced it had resigned as Serba Dinamik's external auditor with immediate effect after the audit firm was served a notice of the lawsuit on June 23.

The audit firm said the suit filed by Serba Dinamik on June 22 against it in regard to the ongoing statutory audit of the company's accounts compromised its ability to independently continue the audit engagement and discharge its professional duties as auditor of the company.

Serba Dinamik had been in dispute with KPMG after KPMG highlighted last month some discrepancies in the company's accounts involving transactions worth about RM4.54 billion, to the company's independent directors. The issues raised were based on the financial accounts for the financial year ended Dec 31, 2020 (FY20).

Subsequently, on June 14, Serba Dinamik announced it had agreed in principle to appoint Ernst & Young Advisory Services Sdn Bhd as an independent reviewer to assess the veracity and accuracy of the audit issues highlighted by KPMG.

Serba Dinamik further said on Wednesday that its board of directors would meet today to decide whether or not to expand the scope of work to be undertaken by the proposed independent reviewer with regard to audit matters flagged by its external auditor.

Shares in Serba Dinamik fell to an all-time low of 40 sen today, before settling at 41 sen, down 12.5 sen or 23.36% from yesterday's closing, valuing the company at RM1.52 billion. Since the start of the year, the stock has fallen by 76.57%.

Read also:
Serba Dinamik declines 23% to new low of 41 sen, EPF continues to dispose shares 
Auditors should communicate professional scepticism to clients before premature reporting to regulators — Serba Dinamik 

KPMG quits as Serba Dinamik auditor; it's now up to SC to uncover the truth 
Serba Dinamik posts RM112 mil net profit for 5QFY21, supported by O&M ops  

Tan Choe Choe