Pua said that he filed complaints with the MIA Council against KPMG and Deloitte Malaysia, their partners Ahmad Nasri Abdul Wahab and Ng Yee Hong, in March and June 2015, respectively.
“However, I have not heard from MIA in more than a year. It is now 16 and 14 months since I filed the complaints with the MIA Council. No action seems to have taken place,” Pua said.
In his complaints, Pua had alleged that both firms intentionally and/or negligently failed to conduct sufficient and necessary due diligence and audit of 1MDB which had resulted in the filing of fraudulent 1MDB annual financial statements.
More specifically, Pua said he had reported against KPMG for its alleged failure to take into consideration the material disclosures of the transactions which took place in 1MDB’s then US$1 billion investment to form an aborted joint venture with Petrosaudi International Limited in 2009-2010.
“From the above sum, Bank Negara had confirmed to the Public Accounts Committee (PAC) that US$700 million was siphoned to an unrelated company, Good Star Limited, whose ultimate beneficiary was Low Taek Jho, more popularly known as Jho Low.
“In fact, 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 auditors Ernst & Young (EY) were sacked,” Pua said, adding that EY had refused to sign off 1MDB’s financial statement due to irregularities in the transactions with Petrosaudi.
Pua also accused KPMG of having intentionally and/or negligently failing to report the fact that 1MDB’s sale of its shares in the joint venture with Petrosaudi and their conversion into a loan took place after the March 2010 financial year.
“As a result, 1MDB was able to report ‘artificially inflated profits’ and failed to disclose the key transactions which were highly dubious within 1MDB Petrosaudi Limited,” he said.
Deloitte Malaysia had taken over from KPMG after the latter was sacked by 1MDB in December 2013.
KPMG had refused to sign off the March 2013 accounts because it was unable to verify the authenticity of 1MDB’s US$2.318 billion investment in an alleged dodgy investment fund parked in Cayman Islands.
“I had accused Deloitte Malaysia of intentionally and/or negligently failing to conduct sufficient and necessary due diligence and audit of the cash flow and liquidity risk of 1MDB.
“Deloitte endorsed 1MDB as a going concern on Nov 5, 2014, after which 1MDB immediately failed to repay a RM2 billion loan at the end of November 2014,” Pua said, adding that 1MDB has yet to file its accounts for March 2015 while Deloitte is still their auditor.
He also said that Deloitte Malaysia had failed to perform a thorough authentication and verification of 1MDB’s investment in the Cayman Islands, which turned out to be fraudulent.
“Of the US$2.318 billion investment, US$1.15 billion has ‘disappeared’ into the now exposed fake Aabar Investment PJS Limited, which was incorporated in the British Virgin Islands.
“The balance of US$940 million was supposedly kept in BSI Bank, Singapore. However, the sum appears to have disappeared altogether after the Singapore authorities shut down the bank for facilitating money laundering,” the DAP national publicity secretary said.
Furthermore, Pua said that Deloitte failed in its audit of 1MDB’s financial statements for March 2013 and 2014 when it did not properly expense the stock options which 1MDB had granted to Aabar.
“The failure to account for the stock options granted, worth at least US$993 million (RM4 billion), meant 1MDB over-reported profits of RM778 million in 2013 and under-reported losses of only RM669 million in 2014.
“So, I call upon MIA Council President Mohd Faiz Mohd Azmi to explain the snail’s pace in dealing with the above complaints despite their severity and scale,” Pua said.
The MIA is the statutory body that established the Accountants Act 1967 to regulate and develop the accountancy profession in Malaysia.