Not true Deloitte blocked from starting latest audit on 1MDB, CEO says

(Malay Mail Online) – DAP MP Tony Pua’s claim that 1Malaysia Development Berhad is blocking Deloitte Malaysia from starting its latest audit on the debt-ridden state-owned investment firm is “untrue”, its chief executive officer Arul Kanda Kandasamy said today.

Arul Kanda also said 1MDB’s board and management had already met with Deloitte to discuss the next audit, but said further updates will be given.

“I refer to a statement issued today by YB Tony Pua as reported in the Malaysian Insider. In relation to 1MDB, YB Tony Pua is quoted as saying that the Finance Ministry and company directors were ‘refusing to allow Deloitte’ to begin auditing 1MDB.

“This is absolutely incorrect and untrue,” he said in a statement today.

Arul Kanda said 1MDB’s met with Deloitte “as early as February 2015” to discuss commencement of an audit after the financial year end of 31 March 2015.

“In fact, the audit of a major 1MDB subsidiary, Edra Global Energy Berhad, has already commenced and is well under way,” he added.

“The Board of 1MDB has maintained a regular dialogue with Deloitte on the audit process and a further update will be issued when appropriate,” he said, without stating when the audit would start and if it had been agreed on.

In the same statement, Arul Kanda noted that 1MDB management’s full attention is now currently on the Auditor-General’s probe, saying: “1MDB is currently undergoing a thorough review and investigation of its accounts by the National Audit Department. Management time is fully focused on this, given the significant public interest to complete the review as soon as possible.”

Today, Pua said Putrajaya’s alleged decision to bar Deloitte from starting the latest audit of 1MDB would likely cause the firm to again miss its deadline for submission of financial statements to regulator Companies Commission, pointing out that this would violate local laws.

1MDB’s financial year ended on March 31, which means it must submit its annual audited accounts no later than September 30.

But Deloitte yesterday disclosed to Parliament’s Public Accounts Committee that it had yet to receive instructions to start the audit.

Pua said failure to submit financial documents on time would contravene Clause 169(1) of the Companies Act, with Clause 17(1) of the same Act prescribing five years’ jail or a RM30,000 fine for directors who fail to comply or wilfully cause non-compliance.

The Petaling Jaya Utara MP urged the Companies Commission not to grant any extension for 1MDB to submit its accounts unlike in the past, claiming that this year’s delay would have been explicitly ordered.

1MDB has had three different auditors since its inception in 2009, with Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah attempting to explain this anomaly by claiming that it was necessary for firms to switch auditors every three years, while also stating that it was better to switch from KPMG to the top audit firm in the world, Deloitte.

The repeated delays and difficulty in closing its accounts was among the issues that have fostered suspicion over 1MDB’s management, amid continued allegations of impropriety in its amassing of RM42 billion in debt over five years.

Deloitte itself is under an investigation by the Malaysian Institute of Accountants following a complaint lodged Pua over its audit of the previous 1MDB financial year.

The firm was incorporated in 2009, after the prime minister announced the decision to turn the Terengganu Investment Authority state fund into a federal agency.

Since then, 1MDB has been dogged by negative publicity over its allegedly opaque deals and debt pile.

Besides being probed by the Auditor-General and PAC, 1MDB is also under investigation by Bank Negara Malaysia while Home Minister Datuk Seri Ahmad Zahid Hamidi confirmed today that police had completed its probe into allegations of criminal breach of trust.