No basis for legal action, says KPMG on Serba Dinamik suit

Photo by Mohd Izwan/The Edge

Photo by Mohd Izwan/The Edge

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KUALA LUMPUR (June 23): KPMG PLT sees no basis for the legal action taken by its client Serba Dinamik Holdings Bhd, who accused the firm of tarnishing the latter's corporate image by raising concerns over its financial accounts.

In a response to theedgemarkets.com query today, a KPMG spokesperson said the audit firm will firmly refute the allegations if the matter goes to court.

"The potential claim relates to a statutory audit that is still in progress and we are unable to make any comments. The audit is being conducted in accordance with the relevant professional standards.

"We see no basis for it and will vigorously contest any court proceedings," it said.

Yesterday, Serba Dinamik called for a press conference to announce that its board had decided to take legal action against KPMG, alleging that the external auditor had been negligent and breached its contractual and statutory duties to the group.

Serba Dinamik's legal consultant Tan Sri Muhammad Shafee Abdullah pointed out that KPMG had raised the red flags in an inappropriate manner.

Meanwhile, the group's newly appointed chairman Datuk Mohamed Ilyas Pakeer Mohamed claimed that the external auditor "has blown the audit issues out of proportion".

To recap, Serba Dinamik has been embroiled in an auditing dispute with KPMG, after its external auditor highlighted discrepancies involving transactions to the tune of RM4.54 billion to the company's independent directors last month. 

The issues raised were based on the financial accounts for the financial year ended Dec 31, 2020.

Since the audit issues were made known to the investing public, the company's institutional investors, including the Employees Provident Fund (EPF) and Permodalan Nasional Bhd, have voiced concerns over the company's governance.

In the meantime, institutional shareholders have cut their stake in the company, causing a loss of over RM3 billion in market capitalisation.

The EPF had sold 20.56 million shares between June 2 and June 22, leaving it with 348.29 million shares or 9.39%.

Kumpulan Wang Persaraan Diperbadankan (KWAP), which had a 5.2% stake in Serba Dinamik, ceased to be a substantial shareholder as of June 1, after disposing of 26.18 million shares or 0.7% between May 31 and June 1.

Read also:
Serba Dinamik to take legal action against external auditor KPMG for alleged negligence
KPMG says audit was proper and will contest Serba Dinamik’s suit — but can a company sue its auditor?
SC says Serba Dinamik probe ongoing and auditors must do their work without fear or favour
Serba Dinamik now says its board will meet on Friday to decide on independent review scope
Selling persists as Serba Dinamik sues KPMG for alleged negligence 

 

Lam Jian Wyn