KUALA LUMPUR (Nov 10): Serba Dinamik Holdings Bhd has initiated its third legal action since its audit issues came to light, this time against EY, whom it appointed in July to undertake a special independent review on the company's financials.
In a bourse filing, Serba Dinamik said it has filed an originating summons against EY Consulting, and is seeking to restrain the auditor from sharing any findings or opinions on the company.
In the summons, Serba Dinamik is seeking a declaration that EY Consulting has misrepresented that it could be appointed to conduct the review, following a directive by Bursa Malaysia, and that its appointment was void ab initio or has no legal effect from the start.
This, it claimed, is because EY Consulting is not registered with the Audit Oversight Board and so is not an auditor "within the meaning of the Main Market Listing Requirement", and it is seeking a court declaration as such.
Serba Dinamik also contended that EY Consulting "lacked independence" as its affiliate serves as Bursa Malaysia's auditor.
"EY Consulting had acted contrary to its undertakings in the letter of engagement when it provided a “Factual Finding Update” to the Securities Commission without seeking Serba Dinamik’s consent," Serba Dinamik said.
"EY Consulting expected Serba Dinamik to seek its consent to release the 'Factual Finding Update' when it was not an auditor, it did not subject itself to any professional standards in the performance of its work and it disclaimed responsibility for its work," it added.
Serba Dinamik, which is seeking restitution and damages from EY Consulting from the lawsuit, has also applied for an interim injunction to block EY from sharing its findings to any party, pending the disposal of the suit.
Hearing for the application is on Nov 11, while case management for the suit has been fixed for Nov 17.
It was reported that EY had conducted a briefing with Serba Dinamik's independent directors and the regulators on the findings of its independent review at end-October.
This was followed swiftly by a directive from Bursa Malaysia to Serba Dinamik, ordering the latter to reveal the findings to shareholders.
In response, Serba said the findings were not material as they were yet to be finalised. Serba Dinamik then sued Bursa Malaysia for what the company described as "acting in excess of power" when it ordered the company to undertake the independent review.
Prior to that, the company had filed a suit against its then-auditor KPMG for alerting regulators back in May on the discrepancies in Serba's financials for the period ended Dec 31, 2020, involving transactions to the tune of several billion ringgit.
Shares of Serba Dinamik had been suspended from trading since its decision not to abide with Bursa's directive to reveal the findings shared by EY during the meeting in October.
The counter last traded at 35 sen on Oct 22, giving it a market capitalisation of RM1.3 billion.
Serba Dinamik's share price has retreated by 78.26% or RM1.26 since the audit issue first came to light in end-May.
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