Tony Pua lauds 1MDB civil suits but asks why KPMG excluded

Wednesday 24 Apr 2024

KUALA LUMPUR (May 11): Opposition lawmaker Tony Pua said today the Malaysian government should be applauded for filing more than 20 civil suits to recover losses suffered by 1Malaysia Development Bhd (1MDB) and SRC International Sdn Bhd.

However, conspicuously missing from the list of suits is a case against KPMG Malaysia, which audited 1MDB's financials for three years from March 2010 to March 2012, Pua said in a statement today.

"Where is the 1MDB suit against its former auditor KPMG ?” said Pua, who is DAP's national publicity secretary.

Pua’s statement today followed the Ministry of Finance’s (MoF) statement yesterday that in the government's continuing efforts to recover losses suffered by 1MDB and SRC, the ministry confirmed that last Friday, legal representatives of both entities filed a combined total of 22 civil suits.

"Six of these writs were filed by 1MDB, while 16 were by SRC for the recovery of assets with a combined total in excess of RM96.6 billion (US$23 billion), including approximately RM300 million against various local parties,” the MoF said.

Yesterday, theedgemarkets.com, citing court documents it sighted, reported that 1MDB filed a total of six separate suits, including against foreign banks Deutsche Bank (M) Ltd, JP Morgan (Switzerland) Ltd and Coutts & Co Ltd.

Also sued were individuals including former premier Datuk Seri Najib Razak, former treasury secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah, as well as former 1MDB chief executive officers (CEOs) Datuk Shahrol Azral Ibrahim Halmi and Arul Kanda Kandasamy, among others.

Also named in the separate suits were fugitive businessman Low Taek Jho (Jho Low), his father Tan Sri Low Hock Peng, sister Low May Lin and accomplice Eric Tan Kim Loong from whom 1MDB is seeking a total of US$1.402 billion.

"Besides this, 1MDB also filed a separate claim against its then legal firm Wong & Partners and partner Brian Chia Hock Gee for a sum of US$1 billion and payment of legal fees of RM664,821.21 for their alleged role in the fraud.

"The sixth suit was filed against Najib's stepson and Hollywood producer Riza Aziz, where 1MDB is said to have sought US$250 million from The Wolf of Wall Street award-winning producer. 1MDB is claiming wilful blindness, reckless indifference and the need to investigate the source of Riza's funds,” theedgemarkets.com reported.

Meanwhile, Pua alleged today that despite a clear case against KPMG for failing its audit duties, the international audit firm had thus far been recalcitrant and refused to arrive at a settlement with the government.

He claimed that KPMG had failed to take into consideration material disclosures of the transactions which took place in 1MDB’s US$1 billion investment to form an aborted joint venture (JV) with PetroSaudi International Ltd (PSI) between 2009 and 2010.

The US$1 billion included at least US$700 million that was siphoned to Jho Low's company, Good Star Ltd, he claimed.

"KPMG performed the arguably record-breaking feat of signing off the March 2010 financial audit within three weeks, after being appointed in September 2010, after the original auditor, Ernst & Young (EY), was sacked for refusing to sign off the accounts,” he said.

“The [KPMG] auditors were satisfied that the US$1 billion investment, which was converted into a [Islamic-compliant] murabaha loan, was sufficiently backed by a corporate guarantee from PSI. This was despite [the fact that] PSI had only US$150,000 in paid-up capital.

"Worse, KPMG did not require PSI to provide any financial statements or records to demonstrate that it was able to fulfil its guarantee in the event of a default,” Pua claimed.

Pua, who is also the Damansara Member of Parliament, claimed that KPMG’s negligence and failure to require PSI to provide financial statements or records resulted in 1MDB further lending another US$800 million to PSI’s subsidiary in 2011.

According to him, the US Department of Justice (US DOJ) had shown that the overwhelming bulk of these additional funds were also misappropriated by Jho Low and his associates, and that 1MDB lost all of the US$1.8 billion lent to PSI’s subsidiary.

"When I repeatedly questioned Datuk Seri Najib Razak in Parliament on 1MDB's financials, the former finance [minister] and prime minister repeatedly emphasised that the company was audited by reputable international auditor KPMG and hence there was no basis for my scepticism and suspicions of financial shenanigans,” Pua said.

"KPMG had in effect colluded with the Najib administration by allowing itself to be used by kleptocrats to cover up their misfeasance,” Pua claimed.

"We call upon the MoF to give no quarter to KPMG, which is clearly not remorseful for its role in the worst case of global kleptocracy investigated by the US DOJ. Since Deloitte Malaysia has settled the matter more than two months ago, 1MDB must commence the legal suit against KPMG immediately,” he said.

Edited ByChong Jin Hun

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