KUALA LUMPUR (Nov 24): The independent consultant appointed to review the financial management of certain investment and projects of Cahya Mata Sarawak Bhd (CMSB) has highlighted several key findings, including the existence of gaps in the contract management processes, which contributed to a project’s losses.

In a filing with the bourse, the group said KPMG Management & Risk Consulting Sdn Bhd also found that there was a lack of monitoring by the associate’s board on the hedging transactions of a certain project which ended in losses due to adverse currency exchange movements.

Its review also found that there was a lack of due diligence and stakeholder management on the joint venture partners’ risks of a project and that the reporting structures by management to the board were not adhered to and complied with in a project, said CMSB.

The group said the realised losses incurred had been accounted for in the past financial results.

“Based on the key findings above, an external lawyer has been appointed to look at the various issues that have arisen and to advise CMSB on all legal issues that arise, in particular in relation to the conduct of senior management at that material time,” said the group.

CMSB said its board has taken immediate steps and measures over the last few months to strengthen the group’s operations and processes, which includes a review of the reporting and realigning of the group structure, with the aim of ensuring the internal controls and risk assessment processes are strengthened, including promoting transparency and accountability.

It said risk oversight at the board level is being strengthened to provide oversight on enterprise material risk and provide updates on key projects in a periodic manner, so that the board would be apprised of such matters on a continuous basis.

The group will have an independent group risk division to drive the risk plan for the organisation, it said, adding that a culture of governance and growth will be actively pursued to strengthen the accountability and integrity at all levels of senior management.

CMSB intends to make operational improvements such as in the project bidding processes, by tightening control over project costs and strengthening of project management.

Additional senior management will be recruited, including a chief risk officer, chief technical officer, head of compliance and chief of staff.

CMSB will also set up an investment committee, chaired by the group managing director, to review and recommend all proposals and investments to the board for information and approval.

The reporting process will be improved through the investment in an enterprise resource planning system to streamline information and data flow, it said.

The group will also appoint a new group chief financial officer with the relevant capabilities and experience, although Tan Mei Fung will continue as head of finance, pending completion of the appointment.

On Aug 30, CMSB announced the ongoing legal investigation into Syed Hizam Alsagoff over allegations of possible financial mismanagement, following a review into the financial management of certain past investments and contracts.

Syed Hizam had been suspended from his duty since May to facilitate the investigation.