Damansara MP Tony Pua pushes for Putrajaya to sue KPMG as well over 1MDB

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Damansara MP Tony Pua said despite an apparently clear case against KPMG for failing its audit duties, the multinational audit firm has refused to arrive at a settlement with the government. — Picture by Shafwan Zaidon
Damansara MP Tony Pua said despite an apparently clear case against KPMG for failing its audit duties, the multinational audit firm has refused to arrive at a settlement with the government. — Picture by Shafwan Zaidon

KUALA LUMPUR, May 11 — DAP national publicity secretary Tony Pua has urged the Finance Ministry to pursue audit firm KPMG Malaysia for allegedly colluding with the administration of former prime minister Datuk Seri Najib Razak in covering up the misdeeds of 1Malaysia Development Bhd (1MDB).

He said despite an apparently clear case against KPMG for failing its audit duties, the multinational audit firm has refused to arrive at a settlement with the government.

“KPMG has failed to take into consideration the material disclosures of the transactions which took place in 1MDB’s then US$1 billion (RM4.12 billion) investment to form an aborted joint venture with Petrosaudi International Limited (PSI) in 2009-2010,” Pua said in a statement.

He added that this includes at least US$700 million (RM2.88 billion) that was allegedly siphoned to fugitive businessman Jho Low’s company, Good Star Limited.

“KPMG had performed the arguably record-breaking feat of signing off the March 2010 financial audit within three weeks, after being appointed in September 2010, following the sacking of the original auditors Ernst & Young (EY) for refusing to sign-off the accounts.

“The auditors were satisfied that the US$1 billion investment which was converted into a murabaha-loan was sufficiently-backed by a corporate guarantee from PSI. This was despite PSI had only US$150,000 (RM617,000) in paid up capital,” Pua said.

The Damansara MP further claimed things were made worse as KPMG did not require PSI to provide any financial statement or records to demonstrate that it was able to fulfil its guarantee, in the event of default.

“KPMG’s failure and negligence has resulted in 1MDB further lending another US$800 million (RM3.2 billion) to PSI’s subsidiary in 2011.

“The United States’ Department of Justice has shown that the overwhelming bulk of these additional funds have also been misappropriated by Jho Low and his associates. 1MDB had lost all of the US$1.8 billion (RM7.41 billion) which was lent to PSI’s subsidiary,” he said.

Nonetheless Pua commended the government for finally filing the 21 suits against various parties yesterday, via 1MDB and its former subsidiary SRC International Sdn Bhd.

Those mentioned in the suit include Najib, former 1MDB office bearers Tan Sri Che Lodin Wok Kamaruddin, former 1MDB chief executive officers Datuk Shahrol Azral Ibrahim Halmi, Arul Kanda Kandasamy, and Mohd Hazem Abdul Rahman.

Also named in the suits are Low, his father Tan Sri Larry Low Hock Peng, sister Low May Lin and close associate Eric Tan Kim Loong.

“The government should be applauded for finally filing these suits. However, conspicuously missing from the list of suits is a case against KPMG Malaysia.

“Earlier on March 3, Deloitte Malaysia has already agreed to a settlement with the government with a payment of US$80 million (RM320 million) for its role in failing to properly audit 1MDB financials from March 2013 to March 2015,” he said.

As Deloitte Malaysia has already settled the matter, Pua said 1MDB must waste no time and commence the legal suit against KPMG immediately.

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