The plaintiffs are claiming losses over breaches that KPMG’s partners allegedly committed in their role as auditor for 1MDB.

In the statement of claim sighted by FMT, the plaintiffs said more than US$5.6 billion had been misappropriated from 1MDB under the direction of former prime minister Najib Razak and implemented by management, “through various fraudulent transactions perpetrated on 1MDB, to the benefit of Najib and his affiliates and contrary to the interests of 1MDB and MoF Inc Malaysia”.

Of the US$5.64 billion, the sum of US$3.197 billion was misappropriated in 2010, 2011 and 2012 when KPMG was the auditor for 1MDB.

The government said it also suffered losses in the form of “irrecoverable advances to bail out 1MDB and its subsidiaries from its liabilities under various debt securities”.

“These losses were brought about by fraudulent transactions and misappropriations on the part of (former prime minister) Najib and company management under his direction,” they said.

The plaintiffs said KPMG had failed to bring to light matters relating to discrepancies in 1MDB’s joint venture deal with PetroSaudi International, and that none of the misappropriations under Najib’s directions were reported by KPMG during the time it acted as auditor for 1MDB.

Previously, finance minister Tengku Zafrul Aziz had said the government was negotiating with KPMG over its role in 1MDB. This came after Damansara MP Tony Pua questioned why the government did not go after KPMG auditors.

It was disclosed in Najib’s 1MDB corruption and money laundering trial that 1MDB paid US$1 billion in 2009 for a 40% stake in the joint venture while PetroSaudi held the remaining 60%.

1MDB later paid another US$830 million in total between 2010 and 2011 for the same purpose. By 2012, the notes were said to be worth US$2.22 billion.

“The auditors failed to report the relevant matters to the authorities such as the Companies Commission of Malaysia (SSM) and Bank Negara Malaysia (BNM),” the statement of claim added.

The case will be fixed for mention on Aug 6 before the High Court.