In a statement today, Pua questioned why 1MDB had not included the international audit firm in its long list of civil suits despite having “a clear case” against the company.
“Since Deloitte Malaysia settled the matter more than two months ago, 1MDB must commence the legal suit against KPMG immediately,” he said.
Previously, Deloitte agreed to a RM320 million settlement with the government for failing to properly audit 1MDB’s transactions from March 2013 to March 2015.
“Despite a clear case against KPMG for failing its audit duties, the international audit firm has thus far been recalcitrant and refused to arrive at a settlement with the government,” Pua said, before highlighting some of the issues he had had with KPMG’s work for 1MDB.
“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, after the original auditor Ernst & Young was sacked for refusing to sign off the accounts.
“KPMG also failed 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 in 2009-2010,” he said.
According to Pua, KPMG had signed off on 1MDB’s US$1 billion investment to form the joint venture with the oil services company, satisfied that it was backed by a corporate guarantee despite PetroSaudi having only US$150,000 in paid-up capital.
“Worse, KPMG did not require PetroSaudi to provide any financial statement or records to demonstrate that it was able to fulfil its guarantee, in the event of a default,” he said.
He added that KPMG’s failure and negligence resulted in 1MDB investing another US$800 million with a PetroSaudi subsidiary in 2011.
“KPMG’s negligence resulted in 1MDB losing all of its US$1.8 billion invested with PetroSaudi and its subsidiaries.”
Yesterday, 1MDB and its former subsidiary SRC International Sdn Bhd filed a total of 21 suits against various parties, including former prime minister Najib Razak, and several ex-1MDB office bearers like Che Lodin Wok Kamaruddin.
Former 1MDB chief executive officers Shahrol Azral Ibrahim Halmi, Arul Kanda Kandasamy and Mohd Hazem Abdul Rahman were also implicated in the civil suit, aside from fugitive businessman Low Taek Jho, his father Larry Low, sister Low May Lin and his close associate Eric Tan.
1MDB also filed separate suits against foreign banks Deutsche Bank, JP Morgan and Coutts & Co.
Pua said today that the government should be applauded for finally filing these suits, saying that preparations for these lawsuits had started under the Pakatan Harapan administration.
KPMG Malaysia was appointed 1MDB auditor in September 2010.