Former Deputy Prime Minister, Tan Sri Muhyiddin Yassin had asked the Minister of Finance for the status of the much delayed financial statements for 1MDB.
In a parliamentary reply dated 16 November, the Minister of Finance responded that “on July 8, 2015, the police seized various original documents from 1MDB’s office. 1MDB’s management has contacted the police regarding the return of the company’s documents, but till today, the original documents haven’t been returned to the company”.
Therefore, since the last financial statement prepared by Deloitte Malaysia for the period ending March 2014, there has been no official audits conducted for the scandal-ridden company. Worse, last year, Deloitte Malaysia has withdrawn its endorsement for the March 2013 and March 2014 financial statements.
This means that 1MDB has since March 2012, or more than 5 years ago, 1MDB has not filed any financial statements which have been endorsed by an external auditor.
This unprecedented delay was despite repeated deadline extensions granted to 1MDB by the Companies Commission of Malaysian (SSM) to file its annual reports. And now the Minister of Finance tells us that it has completely given up and said that it cannot even provide a deadline.
If the Minister of Finance is indeed serious about 1MDB completing its audit process, why hasn’t he, who is also the Prime Minister ‘discuss’ this matter with the Royal Malaysian Police to work out an arrangement for the audit to be carried out?
Surely it cannot be too hard for investigators to allow the auditors to, at the very least, sight the documents needed? Moreover, the police have said that their investigation in 1MDB is now concluded and that they have returned their investigation papers to the Attorney-General’s Chambers. So why exactly are investigators still holding to these documents if it is necessary for the proper auditing of the company?
We are not asking for the Police to return, relinquish or destroy possible evidence in its hands. We are merely asking for the Police to allow the statutory audit of 1MDB to be carried out. The audit is of great urgency and importance as it will confirm if the allegations of billions of ringgit being misappropriated to fictitious investment accounts in various overseas institutions from Singapore to the British Virgin Islands and a little-known island-state of Curacao in South America.
It should be noted that even when the Auditor-General and the Public Accounts Committee was investigating 1MDB prior to 2016, 1MDB refused to even supply its management accounts, despite being requested to do so.
The Finance Minister’s complete lackadaisical attitude towards the audit of a state-owned company with nearly RM40 billion in debts shows that it is a cover up to prevent the truth from being discovered.
The fact that 1MDB cannot produce any audited financial statements since March 2012 further rubbishes Dato’ Seri Najib Razak’s pre-budget defence and praise of 1MDB, and the audacious claim that 1MDB will soon “return to profitability”. It can’t even produce its accounts, what profit is the Prime Minister talking about?
Showing posts with label Deloitte. Show all posts
Showing posts with label Deloitte. Show all posts
Tuesday, November 21, 2017
Saturday, April 22, 2017
1MDB new auditor’s biggest challenge now is to audit and verify the purported sale of 1MDB’s Brazen Sky or its assets to a “undisclosed third party”
The Singapore Straits Times reported that 1MDB is expected to ink an agreement with Abu Dhabi's International Petroleum Investment Co (IPIC) to settle a dispute involving billions of dollars very soon.
In its report, the Singapore daily cited sources as saying the agreement would see 1MDB pay IPIC US$1.2 billion by year end, to settle a loan and accumulated interest from a bailout the IPIC gave 1MDB in July 2015.
It said most of the money would come from the sale of "fund units" from 1MDB subsidiary Brazen Sky to an undisclosed buyer. Brazen Sky is of particular interest to 1MDB watchers because its account in Singapore's BSI Bank was supposed to be the account used to receive funds from 1MDB's Cayman Islands account.
If the Singapore Straits Times report is to be believed, then 1MDB’s newly appointed auditor, Parker Randall will now be faced with their biggest test to date. Parker Randall, represented locally by the Malaysian audit firm, “Afrizan Tarmili Khairul Azhar” (aftaas) must carry out the necessary due diligence and audit to ensure that the transactions taking place are bona fide and above board.
Of interest is the fact that until today, 1MDB has failed to provide any form of clarity of these “fund units” worth US$940 million purported redeemed from a Cayman Island investment fund.
1MDB has refused, despite repeated demands from the Public Accounts Committee and the Auditor-General to provide financial statements and documents of 1MDB’s overseas bank accounts and assets, including that of Brazen Sky Limited.
Worse, these assets were purportedly parked in BSI Bank, Singapore which have already had its merchant banking license withdrawn by Monetary Authority of Singapore. When questioned in Parliament, the Minister of Finance responded that these units were not managed by any fund manager or investment bank, while also refusing to where the “units” have been moved to.
Hence it is critical for Parker Randall or aftaas to confirm the existence and authenticity of the US$940 million worth of “units”. Most interestingly, despite the fluctuating value of investment assets over time, these fund units appeared to have a frozen value of US$940 million since its redemption in January 2015.
In addition, should Brazen Sky or its assets be sold, Parker Randall must verify that the sale and purchase transaction is a genuine transaction and not another case of paper shuffling which have taken place earlier in 1MDB’s US$1.8 billion investment in Petrosaudi.
It is also important for Parker Randall to confirm and satisfy itself on the identity of the mysterious “undisclosed buyer” of these mysterious Brazen Sky assets as part of its audit verification. The auditors must also trace the money trail of the fund transfers from the mysterious undisclosed buyer into 1MDB before being transferred to IPIC.
The audit is all the more important given the spotlight 1MDB has, which has caused some half a dozen of banks around the world to be shutdown or penalised for facilitating money laundering transactions.
Surely, after Deloitte Malaysia disgracefully resigned from 1MDB for failing to detect any of the above illicit and money laundering activities, Parker Randall do not want to follow the same footsteps and sully its international reputation.
In its report, the Singapore daily cited sources as saying the agreement would see 1MDB pay IPIC US$1.2 billion by year end, to settle a loan and accumulated interest from a bailout the IPIC gave 1MDB in July 2015.
It said most of the money would come from the sale of "fund units" from 1MDB subsidiary Brazen Sky to an undisclosed buyer. Brazen Sky is of particular interest to 1MDB watchers because its account in Singapore's BSI Bank was supposed to be the account used to receive funds from 1MDB's Cayman Islands account.
If the Singapore Straits Times report is to be believed, then 1MDB’s newly appointed auditor, Parker Randall will now be faced with their biggest test to date. Parker Randall, represented locally by the Malaysian audit firm, “Afrizan Tarmili Khairul Azhar” (aftaas) must carry out the necessary due diligence and audit to ensure that the transactions taking place are bona fide and above board.
Of interest is the fact that until today, 1MDB has failed to provide any form of clarity of these “fund units” worth US$940 million purported redeemed from a Cayman Island investment fund.
1MDB has refused, despite repeated demands from the Public Accounts Committee and the Auditor-General to provide financial statements and documents of 1MDB’s overseas bank accounts and assets, including that of Brazen Sky Limited.
Worse, these assets were purportedly parked in BSI Bank, Singapore which have already had its merchant banking license withdrawn by Monetary Authority of Singapore. When questioned in Parliament, the Minister of Finance responded that these units were not managed by any fund manager or investment bank, while also refusing to where the “units” have been moved to.
Hence it is critical for Parker Randall or aftaas to confirm the existence and authenticity of the US$940 million worth of “units”. Most interestingly, despite the fluctuating value of investment assets over time, these fund units appeared to have a frozen value of US$940 million since its redemption in January 2015.
In addition, should Brazen Sky or its assets be sold, Parker Randall must verify that the sale and purchase transaction is a genuine transaction and not another case of paper shuffling which have taken place earlier in 1MDB’s US$1.8 billion investment in Petrosaudi.
It is also important for Parker Randall to confirm and satisfy itself on the identity of the mysterious “undisclosed buyer” of these mysterious Brazen Sky assets as part of its audit verification. The auditors must also trace the money trail of the fund transfers from the mysterious undisclosed buyer into 1MDB before being transferred to IPIC.
The audit is all the more important given the spotlight 1MDB has, which has caused some half a dozen of banks around the world to be shutdown or penalised for facilitating money laundering transactions.
Surely, after Deloitte Malaysia disgracefully resigned from 1MDB for failing to detect any of the above illicit and money laundering activities, Parker Randall do not want to follow the same footsteps and sully its international reputation.
Tuesday, March 14, 2017
1MDB Chairman, Tan Sri Irwan Serigar must answer as to why his fellow Directors are so tardy in making urgent and critical decisions on the financial audit of scandal-ridden 1MDB
The last audited financial statements filed by 1MDB was for the accounts for the year-ending March 2014. 1MDB has failed to file their financial statements for 2 consecutive years, March 2015 and March 2016 which were due to by October 2015 and 2016 respectively.
Even so, Deloitte Malaysia has since July last year, withdrawn its endorsements for the financial statements of March 2013 and 2014. At the same time, the disgraced audit firm announced that it had resigned as the auditors of 1MDB as at February 2016.
The new auditors, Parker Randall, which is operated locally by a four-partner Afrizan Tarmili Khairul Azhar (aftaas) was appointed in January this year.
I had asked in my parliamentary question to the Finance Minister last week as to whether Parker Randall will re-audit the 1MDB financial statements for March 2013 and 2014.
The Minister of Finance responded that the Board of Directors will make a decision on the above on “after further discussions with the new auditor”.
The reply also stated that the last time the Board of Directors met to discuss the implications of the US Department of Justice asset-seizure kleptocracy suit was prior to 26 July 2016 when 1MDB had issued a press statement.
Malaysians are shocked that for exactly 1 year after Treasurer-General, Tan Sri Irwan Serigar took over the 1MDB Chairmanship from the disgraced Tan Sri Lodin Wok Kamaruddin, the Board of Directors had basically sat on their backsides and demonstrated little or no urgency over the 1MDB fiasco.
Allegations and evidence have been produced and made available globally by the US Department of Justice which showed that more than US$5 billion have been misappropriation from 1MDB and laundered around the world and yet our Treasurer-General acts as if it is no big deal. These allegations and evidence have been supported since by court prosecutions which took place in Singapore and Switzerland against banks which had facilitated the money-laundering transactions.
Worse, it has also been discovered that at least US$731 million from the above misappropriated sum had found its way into the Prime Minister, Dato’ Seri Najib Razak’s personal bank account. Despite the gravity of the crime, our Treasurer-General, the most senior civil servant responsible for managing our hundreds of billions of ringgit of annual tax revenue has shown only nonchalance in the scandal.
Any auditor worth their salt would immediately tell you that they will not be able to complete a financial audit for the year without the “opening balance” or prior year accounts. In this case, it is clear that there have been no audited and certified accounts for March 2013 and 2014 given that Deloitte has withdrawn its endorsement.
What’s more, the Companies Act requires the annual submission of financial statements endorsed by an appointed external auditor to the Registrar of Companies. It is the statutory requirement for the independent auditor to carry out the above task and Directors who fail to ensure that the above are duly completed in a timely matter may be punishable by up to 5 years’ jail or thirty thousand ringgit.
The only resolution for the above matter is for the accounts for March 2013 and 2014 to be re-audited and re-stated.
Hence, what is the point of appointing Parker Randall as the new auditors if they cannot properly perform their duties? Why is the 1MDB Board of Directors dragging its feet under the chairmanship of the Treasurer-General?
We call upon Tan Sri Irwan Serigar to do what he is being paid to do by the Malaysian tax-payers properly. He must remember that his job is to protect the integrity of his office and not to protect those who have misappropriated and stolen billions of ringgit from the Government and the people.
Even so, Deloitte Malaysia has since July last year, withdrawn its endorsements for the financial statements of March 2013 and 2014. At the same time, the disgraced audit firm announced that it had resigned as the auditors of 1MDB as at February 2016.
The new auditors, Parker Randall, which is operated locally by a four-partner Afrizan Tarmili Khairul Azhar (aftaas) was appointed in January this year.
I had asked in my parliamentary question to the Finance Minister last week as to whether Parker Randall will re-audit the 1MDB financial statements for March 2013 and 2014.
The Minister of Finance responded that the Board of Directors will make a decision on the above on “after further discussions with the new auditor”.
The reply also stated that the last time the Board of Directors met to discuss the implications of the US Department of Justice asset-seizure kleptocracy suit was prior to 26 July 2016 when 1MDB had issued a press statement.
Malaysians are shocked that for exactly 1 year after Treasurer-General, Tan Sri Irwan Serigar took over the 1MDB Chairmanship from the disgraced Tan Sri Lodin Wok Kamaruddin, the Board of Directors had basically sat on their backsides and demonstrated little or no urgency over the 1MDB fiasco.
Allegations and evidence have been produced and made available globally by the US Department of Justice which showed that more than US$5 billion have been misappropriation from 1MDB and laundered around the world and yet our Treasurer-General acts as if it is no big deal. These allegations and evidence have been supported since by court prosecutions which took place in Singapore and Switzerland against banks which had facilitated the money-laundering transactions.
Worse, it has also been discovered that at least US$731 million from the above misappropriated sum had found its way into the Prime Minister, Dato’ Seri Najib Razak’s personal bank account. Despite the gravity of the crime, our Treasurer-General, the most senior civil servant responsible for managing our hundreds of billions of ringgit of annual tax revenue has shown only nonchalance in the scandal.
Any auditor worth their salt would immediately tell you that they will not be able to complete a financial audit for the year without the “opening balance” or prior year accounts. In this case, it is clear that there have been no audited and certified accounts for March 2013 and 2014 given that Deloitte has withdrawn its endorsement.
What’s more, the Companies Act requires the annual submission of financial statements endorsed by an appointed external auditor to the Registrar of Companies. It is the statutory requirement for the independent auditor to carry out the above task and Directors who fail to ensure that the above are duly completed in a timely matter may be punishable by up to 5 years’ jail or thirty thousand ringgit.
The only resolution for the above matter is for the accounts for March 2013 and 2014 to be re-audited and re-stated.
Hence, what is the point of appointing Parker Randall as the new auditors if they cannot properly perform their duties? Why is the 1MDB Board of Directors dragging its feet under the chairmanship of the Treasurer-General?
We call upon Tan Sri Irwan Serigar to do what he is being paid to do by the Malaysian tax-payers properly. He must remember that his job is to protect the integrity of his office and not to protect those who have misappropriated and stolen billions of ringgit from the Government and the people.
Sunday, January 08, 2017
Be it “Parker Randall” or “Afrizan Tarmili Khairul Azhar”, will new 1MDB auditors act as “independent auditors” in an objective, professional and timely manner?
Scandal-ridden 1MDB has finally appointed new auditors to replace Deloitte Malaysia who resigned since the middle of last year. Deloitte is the 3rd audit firm which have resigned in 6 years, following Ernst & Young and KPMG. The new 1MDB chairman, who is also the Treasurer-General, announced that “Parker Randall” appointed to the task two days ago.
A little storm was created as “Parker Randall” in Malaysia is essentially Malaysian audit firm, “Afrizan Tarmili Khairul Azhar” (aftaas) with 4 partners, based in Sri Rampai, Kuala Lumpur.
As the corporate profile downloaded from the firm’s website stated, aftaas is “a member of Parker Randall International” which is an “international association of independent audit and accounting firms”.
As highlighted by Malaysiakini, each member firm of Parker Randall in each country is a separate and independent legal entity. Malaysiakini also pointed out that the 2011 ranking on the largest law and accounting firm networks ranked Parker Randall at 56 among 60. Parker Randall also did not make the list for accountancy publication Accountancy Age's 'Top 100' survey for 2016.
However, what is ultimately most important for Malaysians isn’t the question of whether it is Parker Randall or Afrizan Tarmili Khairul Azhar carrying out the 1MDB audit. What is of utmost importance is whether the newly appointed firm will carry out their responsibilities as “independent auditors”, and I emphasize “independent”, in an objective, professional and timely manner.
For a start, this is the perfect opportunity for aftaas to prove that they can do a better job than global giants, KPMG and Deloitte who have failed miserably in their audit of 1MDB by signing off financial statements which were at best misleading, at worst completely fraudulent.
Both KPMG and Deloitte failed to detect even a single dollar of misappropriation from 1MDB in the five financial years ending March 2010 to 2014. We have since discovered, with confirmation from both Bank Negara Malaysia, the Switzerland Attorney-General as well as the Department of Justice of the United States that at least US$5 billion has been siphoned from 1MDB into private off-shore firms owned by Low Taek Jho, fraudulent entities masquerading as legitimate Abu Dhabi companies as well as dodgy investment funds which acted as money laundering conduits.
The Parliamentary Public Accounts Committee has also similarly provided evidence of the complicity of the 1MDB top management who signed dubious agreements and provided false information to the Board of Directors as well as the regulating agencies.
The previous auditors were so badly and disgracefully duped that Deloitte found it necessary to announce the withdrawal of their recognition of 1MDB’s March 2013 and 2014 audited accounts which they had previously signed off without any qualification. Deloitte said that the above accounts “should no longer be relied upon”.
Hence, regardless of what the 1MDB directors and management might think, it is important for Parker Randall and/or aftaas to carry out a thorough audit of all the questionable transactions of the past where billions of dollars have been misappropriated.
Therefore, the first task by aftaas is simply to review and restate 1MDB’s 2013 and 2014 financial statements which have been withdrawn by Deloitte. The Companies Act requires the annual submission of financial statements endorsed by an appointed external auditor to the Registrar of Companies. It is the statutory requirement for the independent auditor to carry out the above task and Directors who fail to ensure that the above are duly completed in a timely matter may be punishable by up to 5 years’ jail or thirty thousand ringgit.
Following that, with the “right” opening balance determined, then aftaas can proceed to conduct the audit for March 2015 and 2016 which are both already overdue.
If aftaas fails to perform the above review and audit, they can be assured that not only their market reputation will be left in tatters in Malaysia, their international affiliation, Parker Randall – whose credibility 1MDB is banking on – will be similarly disgraced internationally and dragged through the mud.
Thursday, August 11, 2016
Has Deloitte filed reports against 1MDB to the authorities on the potential fraud which led them to disown 1MDB’s audited accounts for FY2013 and FY2014?
In May 2015, I have filed a complaint against 1MDB auditors, Deloitte Malaysia for failing to carry out its auditing duties professionally.
One of the key accusations I had made was that Deloitte Malaysia has “intentionally and/or negligently failed to report the highly dubious and potentially fraudulent transactions in 1MDB to alert the relevant authorities.”
Under the International Standards on Auditing (ISA) 240 adopted by the Malaysian Institute of Accountants (MIA) in 2010, it is the responsibility of the Auditors “to maintain professional skepticism throughout the audit” and to identify and assess “the risks of material misstatement due to fraud”.
The ISA clearly states, “for significant transactions that are outside the normal course of business for the entity… the auditor shall evaluate whether the business rationale (or the lack thereof) of the transactions suggests that they may have been entered into to engage in fraudulent financial reporting or to conceal misappropriation of assets.”
When Deloitte testified with the Public Accounts Committee in June last year, they had insisted that they had carried out their duties professionally and fervently stood by the signed off accounts as true and correct. This was despite the various doubts and controversies which has arisen, including the fact that 1MDB could not repay a mere RM2 billon loan less than a month after Deloitte declared 1MDB was fully able to meet its debt and obligations in November 2014.
However, on 27 July this year, a week after the US Department of Justice laid out the charges against Jho Low and Riza Aziz which showed more than US$3.5 billion misappropriated from 1MDB, Deloitte has finally officially disowned the accounts it signed for 2013 and 2014.
Deloitte however, should not be able to wash its hands off 1MDB’s accounts just by announcing that they “could not be relied upon”. Under the Company’s Act, if an auditor, in the course of the performance of his duties as auditor of a company, discovers that there has been a breach or non-observance of any of the provisions of the Companies Act which are not “adequately dealt” with by the company’s directors and management, he must “report the matter in writing to the Registrar (of Companies)”. Such a “breach or non-observance” would include fraud and dishonesty.
The penalty for failing to do so is “imprisonment for two years or thirty thousand ringgit or both.”
Hence the simple question to Deloitte Malaysia is, now that you have finally decided that you may have been defrauded by 1MDB, will you do the necessary, are required by the law to submit the report and complaint to the Registrar of Companies for further action? The failure to do so will certainly damage the trust shareholders of companies would have for Deloitte to carry out audits diligently and professionally to protect their interest, especially in the light of fraud and embezzlement by company officials.
One of the key accusations I had made was that Deloitte Malaysia has “intentionally and/or negligently failed to report the highly dubious and potentially fraudulent transactions in 1MDB to alert the relevant authorities.”
Under the International Standards on Auditing (ISA) 240 adopted by the Malaysian Institute of Accountants (MIA) in 2010, it is the responsibility of the Auditors “to maintain professional skepticism throughout the audit” and to identify and assess “the risks of material misstatement due to fraud”.
The ISA clearly states, “for significant transactions that are outside the normal course of business for the entity… the auditor shall evaluate whether the business rationale (or the lack thereof) of the transactions suggests that they may have been entered into to engage in fraudulent financial reporting or to conceal misappropriation of assets.”
When Deloitte testified with the Public Accounts Committee in June last year, they had insisted that they had carried out their duties professionally and fervently stood by the signed off accounts as true and correct. This was despite the various doubts and controversies which has arisen, including the fact that 1MDB could not repay a mere RM2 billon loan less than a month after Deloitte declared 1MDB was fully able to meet its debt and obligations in November 2014.
However, on 27 July this year, a week after the US Department of Justice laid out the charges against Jho Low and Riza Aziz which showed more than US$3.5 billion misappropriated from 1MDB, Deloitte has finally officially disowned the accounts it signed for 2013 and 2014.
Deloitte however, should not be able to wash its hands off 1MDB’s accounts just by announcing that they “could not be relied upon”. Under the Company’s Act, if an auditor, in the course of the performance of his duties as auditor of a company, discovers that there has been a breach or non-observance of any of the provisions of the Companies Act which are not “adequately dealt” with by the company’s directors and management, he must “report the matter in writing to the Registrar (of Companies)”. Such a “breach or non-observance” would include fraud and dishonesty.
The penalty for failing to do so is “imprisonment for two years or thirty thousand ringgit or both.”
Hence the simple question to Deloitte Malaysia is, now that you have finally decided that you may have been defrauded by 1MDB, will you do the necessary, are required by the law to submit the report and complaint to the Registrar of Companies for further action? The failure to do so will certainly damage the trust shareholders of companies would have for Deloitte to carry out audits diligently and professionally to protect their interest, especially in the light of fraud and embezzlement by company officials.
Wednesday, August 03, 2016
How can a Finance Minister with any sense of integrity and accountability claim that 1MDB’s disowned financial statements for the years ending March 2013 and 2014 “doesn’t affect 1MDB”?
Deloitte Malaysia who signed off 1MDB’s controversial accounts for the financial years ending March 2013 and 2014 has publicly disowned the veracity of the audited reports. This has forced the Board of Directors of 1MDB to announce that “its 2013 and 2014 audited financial statements should no longer be relied on until allegations made by the United States (US) Department of Justice (DOJ) are determined in court”.
However, instead of setting off more alarm bells, the newly appointed Second Finance Minister, Datuk Johari Abdul Ghani brushes of the significance and importance of the above development by claiming that it “doesn’t affect 1MDB”.
He said that it is because 1MDB no longer has bank loans and doesn’t plan to borrow money.
Firstly, the irresponsible statement by Datuk Johari Abdul Ghani is misleading because 1MDB is still laden with multi-billion dollar debts which have yet to be repaid. They include the US$6.5 billion worth of bonds raised by Goldman Sachs, RM5 billion sukuk guaranteed by the Federal Government, RM2.4 billion sukuk via its subsidiary Bandar Malaysia Sdn Bhd and another RM800 million of borrowings from SOCSO.
Secondly, the Second Finance Minister appears completely uninterested in the reasons or basis why Deloitte has withdrawn its endorsement for 1MDB’s accounts for 2013 and 2014.
The DOJ suit has shown that Deloitte has failed to discover that 1MDB had made more than US$3.5 billion of payments over the course of 2012 t0 2014 to a fraudulent Aabar Investment PJS Limited, incorporated in the British Virgin Islands (BVI).
Deloitte found nothing suspicious in 1MDB Global Investment Limited’s US$1.56 billion investment in several dodgy and obscure investment funds, including the Devonshire Growth, Enterprise Emerging Markets and Cistenique investment funds. The US DOJ had determined that these funds had acted as conduits in the money laundering scam, including US$681 million which had ended up in the Prime Minister, Dato’ Seri Najib Razak’s personal bank account.
Deloitte was also led to believe that US$1.22 billion was successfully redeemed from 1MDB’s fake investment in the Cayman Islands, when in reality 1MDB was making round-tripping transactions with money from its subsidiary, 1MDB Global Investment Limited. This was revealed separately by documents exposed by the Sarawak Report.
Why is Datuk Johari Abdul Ghani completely disinterested in the missing and embezzled funds? Why is there no demand from the Minister for the accounts to be re-audited?
Is his promotion from Deputy Finance Minister precisely because he will stand by the Prime Minister through thick and thin to cover up the multi-billion-dollar misappropriation which has taken place in the wholly-owned subsidiary of the Ministry of Finance?
Malaysians are disgusted that the Cabinet has failed to take any concrete actions to ensure accountability in 1MDB. No action has been taken against any of the officials involved despite the damning Public Accounts Committee (PAC) and still-classified Auditor-General’s Report, as well as the latest expose by the US DOJ.
Datuk Johari Abdul Ghani further asserted that Putrajaya is “very confident” that 1MDB will win the US$6.5 billion arbitration case filed by IPIC. His sheer confidence is surprising given the DOJ developments which has clearly shown 1MDB’s various key official playing an integral role in conspiring to defraud 1MDB.
Under such circumstances, how is 1MDB going to be able to prove to the London Arbitration Court that 1MDB is an innocent party to the massive fraud? Will Datuk Johari resign if the decision is found to be not in 1MDB’s favour?
Saturday, July 30, 2016
Deloitte Malaysia has disowned 1MDB audited accounts for March 2013 and 2014 – will KPMG do the same for the audited accounts it signed off for 2010, 2011 and 2012?
The United States Department of Justice’s (DOJ) explosive exposé has finally resulted of Deloitte Malaysia finally telling 1MDB that they no longer stand by the March 2013 and 2014 financial statements which they signed off on 28 March 2014 and 5 November 2014 respectively.
The DOJ’s account showed that Deloitte has failed to discover in its audit that 1MDB had made more than US$3.5 billion of payments over the course of 2012 t0 2014 to a fraudulent Aabar Investment PJS Limited, incorporated in the British Virgin Islands (BVI).
Deloitte also did not discover anything suspicious in 1MDB Global Investment Limited’s US$1.56 billion investment in several dodgy and obscure investment funds, including the Devonshire Growth, Enterprise Emerging Markets and Cistenique investment funds. The US DOJ had determined that these funds had acted as conduits in the money laundering scam, including US$681 million which had ended up in the Prime Minister, Dato’ Seri Najib Razak’s personal bank account.
Deloitte was also led to believe that US$1.22 billion was successfully redeemed from 1MDB’s fake investment in the Cayman Islands, when in reality 1MDB was making round-tripping transactions with money from its subsidiary, 1MDB Global Investment Limited. This was revealed separately by documents exposed by the Sarawak Report.
Deloitte’s gullibility had allowed 1MDB executives and the Najib administration to cite and abuse the international audit firm’s international “reputation” to lend credibility to 1MDB. They helped mask the multi-billion dollar shenanigans which were taking place in the state-owned enterprise for the past few years.
However, Deloittle was not the only auditor guilty of such negligence. Equally gullible to 1MDB executives lies and deceit was KPMG who signed off the 1MDB accounts for the years ending March 2010, 2011 and 2012 before they were sacked in December 2013.
In fact, it was KPMG who signed of the March 2010 accounts on 4 October 2010 in less than 3 weeks after they replaced the previous auditors, Ernst & Young, who were sacked for refusing to sign off the accounts.
The March 2010 accounts was crucial because it had involved 1MDB’s first investment of US$1 billion to form the short-lived joint venture with Petrosaudi International Limited. As we now know for a fact, US$700 million of that investment was embezzled by Jho Low, with complicity by 1MDB top executives.
KPMG had then intentionally and/or negligently failed to report the fact that 1MDB’s sale and conversion of their stake in the Petrosaudi joint venture into a loan took place only 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.
The nullification of the 1MDB’s 2010 audit would also mean that the 2011 and 2012 audits would automatically cease to be valid as well.
The question is, now that the US DOJ has surfaced evidence that the entire Petrosaudi transaction was a fraud for the purposes of money-laundering, will KPMG in form 1MDB and the public that they will no longer stand by the audited accounts like what Deloitte has done?
Or will KPMG decide to grit its teeth and stubbornly stand by the audited accounts which have now proven at best doubtful in the light of the recent developments?
The DOJ’s account showed that Deloitte has failed to discover in its audit that 1MDB had made more than US$3.5 billion of payments over the course of 2012 t0 2014 to a fraudulent Aabar Investment PJS Limited, incorporated in the British Virgin Islands (BVI).
Deloitte also did not discover anything suspicious in 1MDB Global Investment Limited’s US$1.56 billion investment in several dodgy and obscure investment funds, including the Devonshire Growth, Enterprise Emerging Markets and Cistenique investment funds. The US DOJ had determined that these funds had acted as conduits in the money laundering scam, including US$681 million which had ended up in the Prime Minister, Dato’ Seri Najib Razak’s personal bank account.
Deloitte was also led to believe that US$1.22 billion was successfully redeemed from 1MDB’s fake investment in the Cayman Islands, when in reality 1MDB was making round-tripping transactions with money from its subsidiary, 1MDB Global Investment Limited. This was revealed separately by documents exposed by the Sarawak Report.
Deloitte’s gullibility had allowed 1MDB executives and the Najib administration to cite and abuse the international audit firm’s international “reputation” to lend credibility to 1MDB. They helped mask the multi-billion dollar shenanigans which were taking place in the state-owned enterprise for the past few years.
However, Deloittle was not the only auditor guilty of such negligence. Equally gullible to 1MDB executives lies and deceit was KPMG who signed off the 1MDB accounts for the years ending March 2010, 2011 and 2012 before they were sacked in December 2013.
In fact, it was KPMG who signed of the March 2010 accounts on 4 October 2010 in less than 3 weeks after they replaced the previous auditors, Ernst & Young, who were sacked for refusing to sign off the accounts.
The March 2010 accounts was crucial because it had involved 1MDB’s first investment of US$1 billion to form the short-lived joint venture with Petrosaudi International Limited. As we now know for a fact, US$700 million of that investment was embezzled by Jho Low, with complicity by 1MDB top executives.
KPMG had then intentionally and/or negligently failed to report the fact that 1MDB’s sale and conversion of their stake in the Petrosaudi joint venture into a loan took place only 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.
The nullification of the 1MDB’s 2010 audit would also mean that the 2011 and 2012 audits would automatically cease to be valid as well.
The question is, now that the US DOJ has surfaced evidence that the entire Petrosaudi transaction was a fraud for the purposes of money-laundering, will KPMG in form 1MDB and the public that they will no longer stand by the audited accounts like what Deloitte has done?
Or will KPMG decide to grit its teeth and stubbornly stand by the audited accounts which have now proven at best doubtful in the light of the recent developments?
Wednesday, July 27, 2016
Deloitte Malaysia washes hands off 1MDB; new 1MDB Board of Directors fails its first test of integrity and accountability
Yesterday, the new Board of Directors of scandal-ridden 1MDB had peculiarly announced that “its 2013 and 2014 audited financial statements should no longer be relied on until allegations made by the United States (US) Department of Justice (DOJ) are determined in court”.
The announcement further added that 1MDB is in the midst of seeking a new auditor after Deloitte notified of its intention to resign on Feb 26.
It is clear from this peculiar announcement coming hot on the trails of the DOJ exposé was a result of Deloitte finally telling 1MDB that they no longer stand by the March 2013 and 2014 financial statements which they signed off on 28 March 2014 and 5 November 2014 respectively.
The evidence presented by the DOJ clearly showed that Deloitte has made a complete mess of 1MDB’s audit for the two financial years. The auditors were made complete fools by 1MDB’s executives who repeatedly embezzled billions of dollars from the company. They were hoodwinked, perhaps too readily, by fictitious documents and outrageous lies presented by the company’s management.
Deloitte has failed to discover in its audit that 1MDB had made more than US$3.5 billion of payments over the course of 2012 to 2014 to a fraudulent Aabar Investment PJS Limited, incorporated in the British Virgin Islands (BVI).
Deloitte found nothing suspicious in 1MDB Global Investment Limited’s US$1.56 billion investment in several dodgy and obscure investment funds, including the Devonshire Growth, Enterprise Emerging Markets and Cistenique investment funds. The US DOJ had determined that these funds had acted as conduits in the money laundering scam, including US$681 million which had ended up in the Prime Minister, Dato’ Seri Najib Razak’s personal bank account.
Deloitte was also led to believe that US$1.22 billion was successfully redeemed from 1MDB’s fake investment in the Cayman Islands, when in reality 1MDB was making round-tripping transactions with money from its subsidiary, 1MDB Global Investment Limited. This was revealed separately by documents exposed by the Sarawak Report.
Deloitte’s gullibility had allowed 1MDB executives and the Najib administration to cite and abuse the international audit firm’s international “reputation” to lend credibility to 1MDB. They helped mask the multi-billion dollar shenanigans which were taking place in the state-owned enterprise for the past few years.
With the DOJ’s exposé, it has finally come to a stage where it is no longer tenable for Deloitte to standby the financial statements it audited for 2013 and 2014. Hence 1MDB was forced into making this queer announcement to deny the veracity of its own financial report.
While Deloitte’s belated withdrawal of its endorsement for 1MDB’s financial statements were understandable, the 1MDB Board’s continued insistence that “no wrongdoing has been committed by 1MDB and that the past audited financial statements continue to show a true and fair view of the company’s affairs” is shocking and utterly irresponsible.
Despite the overwhelming evidence which has publicly surfaced, the newly appointed Directors led by Treasury-General Tan Sri Irwan Serigar is persisting with a massive cover up of the crimes which have taken place within 1MDB.
It is now obviously that Tan Sri Irwan Serigar is only interested in carrying on the “stellar” work of the previous Board of Directors who had resigned en masse in absolute disgrace in April.
When the Treasury-General had testified before the Parliamentary Public Accounts Committee in June 2014, he had absolved himself from all blame by claiming that he had no control or supervisory powers over 1MDB. In fact, he blamed Clause 117 of 1MDB’s Memorandum and Articles of Association which grated all such powers directly to the Prime Minister.
However, despite the abolition of the above Clause and his appointment as the new Chairman, Tan Sri Irwan Serigar has shown that he is cut from the same cloth. His loyalty is to Dato' Seri Najib Razak and he has little care for integrity and accountability.
Monday, July 18, 2016
What has happened to the complaint filed with the Malaysian Institute of Accountants against KPMG and Deloitte which were filed more than a year ago?
I have filed complaints against the auditors of 1Malaysia Development Bhd (1MDB) against KPMG and Deloitte Malaysia, their partners Ahmad Nasri Abdul Wahab and Ng Yee Hong, in March and June 2015 respectively with the Malaysian Institute of Accountants (MIA).
I had alleged that both firms intentionally and/or negligently failed to conduct sufficient and necessary due diligence and audit of 1MDB which have resulted in the filing of fraudulent 1MDB annual financial statements.
My complaint against KPMG was for its 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.
Of the above sum, Bank Negara Malaysia (BNM) has 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, or more popularly known as Jho Low.
In fact, KPMG performed the arguably record-breaking feat of signing off the March 2010 financial audit within 3 weeks after being appointed in September 2010, after the original auditors Ernst & Young (EY) were sacked. EY had refused to sign off 1MDB’s financial statement due to irregularities in the transactions with Petrosaudi.
Most crucially, KPMG also intentionally and/or negligently failed 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.
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 a 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 1MDB. Deloitte endorsed 1MDB as a going concern on 5 November 2014, after which 1MDB immediately failed to repay a RM2 billion loan at the end of November 2014.
This was because Deloitte Malaysia has 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.
In addition, Deloitte Malaysia has failed in its audit of 1MDB’s financial statements for March 2013 and 2014 when it failed to 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 reported over reported profits of RM778 million in 2013 and under reported loss of only RM669 million in 2014.
As of today, 1MDB has yet to file its accounts for March 2015 while Deloitte remains their auditors.
It is now 16 and 14 months since I’ve filed the respective complaints with the MIA. The MIA is the statutory body established the Accountants Act, 1967 to regulate and develop the accountancy profession in Malaysia.
However, I have not heard from MIA in more than a year. No action seems to have taken place. Investigations, if any, appears not to have achieve any outcomes.
I call upon the MIA Council led by its President, Dato Mohd Faiz Mohd Azmi to explain the snail’s pace of dealing with the above complaints, despite their severity and scale, as well as the involvement of high profile public interest.
Wednesday, July 13, 2016
Did 1MDB GIL pay US$1.283 billion to Aabar Investment PJS Limited to bluff Deloitte that the sums redeemed from 1MDB’s Cayman Island investments were “received”?
When Sarawak Report exposed banking records of 1MDB Global Investment Limited (1MDB GIL) which paid US$1.28 billion to the fraudulent Aabar Investment PJS Limited (“Aabar (BVI)”) between 12 September to 14 November 2014, many questions were raised.
Why did 1MDB GIL pay Aabar (BVI) the money even though there were no business transactions, agreements or dealings between the two entities? Why wasn’t these fund transfers disclosed and explained during Arul Kanda’s testimonies with the PAC?
Unfortunately, my questions in my statement issued yesterday did not elicit any response from the 1MDB President, Arul Kanda.
Then it occurred to me that the 1MDB Financial Statements for the year ending 31 March 2014 was signed off by the auditors, Deloitte coincidentally on 4 November 2014, where 1MDB GIL also made a payment of US$222 million to Aabar (BVI).
At that point in time, there was increasing concern over 1MDB’s US$2.318 billion investment in an obscure investment fund based in Cayman Islands. The Board of Directors minutes have shown that the Management were repeatedly instructed to redeem the investment and repatriate the proceeds back to Malaysia throughout 2014. The company was under immense pressure because the authenticity of the investment was being publicly questioned.
Based on the testimony of Deloitte to the Public Accounts Committee (PAC), the auditors were particularly insistent that 1MDB was able to redeem most, if not all of the Caymans investment before signing off the much-delayed statements which were already past due.
The accounts were finally signed off by Deloitte when 1MDB was able to “show” the auditors that US$1.22 billion have been redeemed. The money was however, not repatriated to Malaysia.
The Mar 2014 Financial Statements wrote that “as at the date of this report (4 Nov 2014), the amounts received from the redemption of investments US$1.22 billion… have been substantially utilised for the purposes of debt interest payment, working capital and payments to Aabar as refundable deposits…”
Based on the 1MDB GIL transactions Sarawak Report exposed 2 days ago, coincidentally 1MDB GIL has paid US$1.22 billion to Aabar (BVI) by 4 November 2014! (See Table 1 below)
Hence we have now figured out the most likely reason why 1MDB GIL made these mysterious unexplained payments to Aabar (BVI). The transactions were meant to hoodwink Deloitte into accepting that all the funds purportedly “received” from the Cayman Islands amounting to US$1.22 billion have pretty much been immediately used to pay Aabar (BVI).
The catch is, the money used to pay Aabar (BVI) did not come from the controversial Caymans investment, but from 1MDB’s own funds in its wholly-owned subsidiary, 1MDB GIL! Unfortunately, Deloitte was sufficiently cheated and bluffed by the 1MDB crooks to sign off the accounts so readily.
We call upon Deloitte to review the documents shown to them for them to be so sufficiently satisfied as to sign off the 1MDB accounts so readily. Should these documents shown to them prove to be fraudulent or manipulated on hindsight, they must immediately file police reports to clear their name and ensure that the crooks are investigated.
Why did 1MDB GIL pay Aabar (BVI) the money even though there were no business transactions, agreements or dealings between the two entities? Why wasn’t these fund transfers disclosed and explained during Arul Kanda’s testimonies with the PAC?
Unfortunately, my questions in my statement issued yesterday did not elicit any response from the 1MDB President, Arul Kanda.
Then it occurred to me that the 1MDB Financial Statements for the year ending 31 March 2014 was signed off by the auditors, Deloitte coincidentally on 4 November 2014, where 1MDB GIL also made a payment of US$222 million to Aabar (BVI).
At that point in time, there was increasing concern over 1MDB’s US$2.318 billion investment in an obscure investment fund based in Cayman Islands. The Board of Directors minutes have shown that the Management were repeatedly instructed to redeem the investment and repatriate the proceeds back to Malaysia throughout 2014. The company was under immense pressure because the authenticity of the investment was being publicly questioned.
Based on the testimony of Deloitte to the Public Accounts Committee (PAC), the auditors were particularly insistent that 1MDB was able to redeem most, if not all of the Caymans investment before signing off the much-delayed statements which were already past due.
The accounts were finally signed off by Deloitte when 1MDB was able to “show” the auditors that US$1.22 billion have been redeemed. The money was however, not repatriated to Malaysia.
The Mar 2014 Financial Statements wrote that “as at the date of this report (4 Nov 2014), the amounts received from the redemption of investments US$1.22 billion… have been substantially utilised for the purposes of debt interest payment, working capital and payments to Aabar as refundable deposits…”
Based on the 1MDB GIL transactions Sarawak Report exposed 2 days ago, coincidentally 1MDB GIL has paid US$1.22 billion to Aabar (BVI) by 4 November 2014! (See Table 1 below)
Hence we have now figured out the most likely reason why 1MDB GIL made these mysterious unexplained payments to Aabar (BVI). The transactions were meant to hoodwink Deloitte into accepting that all the funds purportedly “received” from the Cayman Islands amounting to US$1.22 billion have pretty much been immediately used to pay Aabar (BVI).
The catch is, the money used to pay Aabar (BVI) did not come from the controversial Caymans investment, but from 1MDB’s own funds in its wholly-owned subsidiary, 1MDB GIL! Unfortunately, Deloitte was sufficiently cheated and bluffed by the 1MDB crooks to sign off the accounts so readily.
We call upon Deloitte to review the documents shown to them for them to be so sufficiently satisfied as to sign off the 1MDB accounts so readily. Should these documents shown to them prove to be fraudulent or manipulated on hindsight, they must immediately file police reports to clear their name and ensure that the crooks are investigated.
Thursday, March 17, 2016
Why has the Royal Malaysian Police not investigated 1MDB's missing Cayman Islands investment funds?
I had asked the Minister of Finance who is the investment bank which is managing the balance of the proceeds in the form of “units” which was redeemed from 1MDB’s Cayman Islands investment amounting to the reported RM940 million.
I received the reply yesterday stating that “no investment bank was appointed to manage state investment firm 1MDB's funds in the Cayman Islands.”
The lies by 1MDB and the Minister of Finance have now come a full circle, which strengthens the suspicions that there was never any substantial money invested in the Cayman Islands. The investment was purportedly made with the US$2.318 billion proceeds from the disposal of 1MDB’s investment with PetroSaudi International Limited.
Instead, the supposed opaque investment now looks like a cover story for 1MDB to hide the fact that the billions of dollars invested with PetroSaudi have been lost through embezzlement and pilferage. In fact the entire scam was so well-thought through that it fooled international auditors KPMG and Deloitte for years.
However, the chickens finally returned to roost when 1MDB was forced to “redeem” the funds from Cayman Islands.
Under pressure from debtors, 1MDB CEO Arul Kanda hurriedly announced on 13 January 2015 that "following a commitment made by the Chairman of the Board of Directors in a statement dated 23 December 2014, 1MDB can confirm that it has now redeemed in full the US$2.318 billion invested by the company in a Cayman Islands registered fund”.
Again, under pressure to explain what exactly has been “redeemed”, Arul Kanda told the Singapore Business Times on 9 February 2015 that “The cash is in our accounts and in US dollars. I can assure you (about that) . . . I have seen the statements.”
The Minister of Finance further confirmed on 11 March 2015 in Parliament that the “cash”was held in BSI Bank in Singapore. He further explained that the money wasn’t repatriated to Malaysia to avoid the hassle of Bank Negara approvals.
However, following a damning exposé by the Sarawak Report that BSI Bank denied the existence of cash held in the 1MDB account, the Minister of Finance retracted his earlier reply in Parliament. On 19 May 2015, and informed the House that the redeemed proceeds were “assets” and not cash.
But a few days later, the mystery had deepened when Second Finance Minister Husni Hanadzlah claimed that what was held in BSI Bank were “units”, when he was asked to clarify on the exact nature of these “assets” in Singapore.
On 10 June 2015, without explaining what these “units” really were, Arul Kanda blamed the entire fiasco of cash to assets to units on “miscommunications on the matter”.
Now, the latest reply from the Finance Minister has proven that Arul Kanda and 1MDB has “miscommunicated” not only on the form of proceeds which were redeemed from the
Caymans investment. The reply showed without a doubt that Arul Kanda and 1MDB lied about the fact that the balance of the US$940 million investment in Caymans were redeemed in the first place.
The purported “investment” is still stuck in Cayman Islands and could not be liquidated.
Even more shocking was the claim by Dato’ Seri Najib Razak that there was no investment bank fund manager for the “units”! How can there be “units” if there is no fund manager?
1MDB must be the first investor in the world who can hold fund manager-less units creating a brand new class of investment assets!
If not, all of the above points to the fact that lies after lies after lies were told by 1MDB and the Government to carry out a massive cover up of the loss of billions of ringgit by 1MDB over its investment in and with PetroSaudi International. For the billions we have invested in PetroSaudi, we are now in possession of worthless or even fake and fraudulent “units”.
Why hasn’t the Royal Malaysian Police conducted a thorough investigation over the missing funds and these dodgy “units” even after I have made my police report exactly in March a year ago?
I received the reply yesterday stating that “no investment bank was appointed to manage state investment firm 1MDB's funds in the Cayman Islands.”
The lies by 1MDB and the Minister of Finance have now come a full circle, which strengthens the suspicions that there was never any substantial money invested in the Cayman Islands. The investment was purportedly made with the US$2.318 billion proceeds from the disposal of 1MDB’s investment with PetroSaudi International Limited.
Instead, the supposed opaque investment now looks like a cover story for 1MDB to hide the fact that the billions of dollars invested with PetroSaudi have been lost through embezzlement and pilferage. In fact the entire scam was so well-thought through that it fooled international auditors KPMG and Deloitte for years.
However, the chickens finally returned to roost when 1MDB was forced to “redeem” the funds from Cayman Islands.
Under pressure from debtors, 1MDB CEO Arul Kanda hurriedly announced on 13 January 2015 that "following a commitment made by the Chairman of the Board of Directors in a statement dated 23 December 2014, 1MDB can confirm that it has now redeemed in full the US$2.318 billion invested by the company in a Cayman Islands registered fund”.
Again, under pressure to explain what exactly has been “redeemed”, Arul Kanda told the Singapore Business Times on 9 February 2015 that “The cash is in our accounts and in US dollars. I can assure you (about that) . . . I have seen the statements.”
The Minister of Finance further confirmed on 11 March 2015 in Parliament that the “cash”was held in BSI Bank in Singapore. He further explained that the money wasn’t repatriated to Malaysia to avoid the hassle of Bank Negara approvals.
However, following a damning exposé by the Sarawak Report that BSI Bank denied the existence of cash held in the 1MDB account, the Minister of Finance retracted his earlier reply in Parliament. On 19 May 2015, and informed the House that the redeemed proceeds were “assets” and not cash.
But a few days later, the mystery had deepened when Second Finance Minister Husni Hanadzlah claimed that what was held in BSI Bank were “units”, when he was asked to clarify on the exact nature of these “assets” in Singapore.
On 10 June 2015, without explaining what these “units” really were, Arul Kanda blamed the entire fiasco of cash to assets to units on “miscommunications on the matter”.
Now, the latest reply from the Finance Minister has proven that Arul Kanda and 1MDB has “miscommunicated” not only on the form of proceeds which were redeemed from the
Caymans investment. The reply showed without a doubt that Arul Kanda and 1MDB lied about the fact that the balance of the US$940 million investment in Caymans were redeemed in the first place.
The purported “investment” is still stuck in Cayman Islands and could not be liquidated.
Even more shocking was the claim by Dato’ Seri Najib Razak that there was no investment bank fund manager for the “units”! How can there be “units” if there is no fund manager?
1MDB must be the first investor in the world who can hold fund manager-less units creating a brand new class of investment assets!
If not, all of the above points to the fact that lies after lies after lies were told by 1MDB and the Government to carry out a massive cover up of the loss of billions of ringgit by 1MDB over its investment in and with PetroSaudi International. For the billions we have invested in PetroSaudi, we are now in possession of worthless or even fake and fraudulent “units”.
Why hasn’t the Royal Malaysian Police conducted a thorough investigation over the missing funds and these dodgy “units” even after I have made my police report exactly in March a year ago?
Tuesday, September 22, 2015
Deloitte Malaysia failed to properly account for 1MDB's cost of options, understates losses by at least RM3.24 billion
The Wall Street Journal (WSJ) reported on Thursday that US$993 million, which was allegedly paid to International Petroleum Investment Corporation (IPIC) by 1MDB to buy back the latter’s options, has not been properly accounted for. The options were granted to IPIC in 2012 to acquire up to 49% of its two energy subsidiaries, Powertek Investment Holdings, and 1MDB Energy (Langat) Sdn Bhd, as part of the condition for the provision of a guarantee by IPIC for US$3.5 billion of 1MDB bonds.
The above exposé raises another question of Deloitte Malaysia’s professionalism when auditing the accounts of 1MDB in 2013 and 2014.
The above exposé raises another question of Deloitte Malaysia’s professionalism when auditing the accounts of 1MDB in 2013 and 2014.
Monday, September 21, 2015
Was Deloitte Malaysia wilfully misled or negligent over the options granted by 1MDB to IPIC?
The Wall Street Journal (WSJ) reported on Thursday that US$993 million which was allegedly paid to IPIC by 1MDB to buy back the latter’s options have not been properly unaccounted for. The options were granted to IPIC in 2012 to acquire up to 49% of its two energy subsidiaries, Powertek Investment Holdings and 1MDB Energy (Langat) Sdn Bhd as part of the condition for the provision of a guarantee by IPIC for US$3.5 billion of 1MDB bonds.
According to the March 2014 Financial Statement audited by Deloitte Malaysia, 1MDB claimed the proceeds of US$1.22 billion derived from the redemption of its investment in Cayman Islands was instantly and “substantially utilised to pay debt interest, Aabar options, working capital”. The sum used to redeem the options granted to Aabar Investment PJS, a subsidiary of IPIC, according to both The Edge and WSJ amounted to US$993 million.
However, this payment of nearly US$1 billion was not reflected anywhere in the IPIC financial statements for the year ending December 2014, which was audited by Ernst & Young. Instead, the statements disclosed that 1MDB still owes an additional US$481 million to IPIC for the termination of the said options.
In 1MDB’s responses since the above expose, the company failed to explain the “missing” billion dollars. Instead the company executives tried to obfuscate the matter by claiming that “despite the malicious and wrong second Wall Street Journal article on September 18, 2015, upon payment of the “nearly US$1 billion” deposit by 1MDB, the options over the energy assets have indeed been terminated”.
However, the WSJ never queried the termination of “the options over the energy assets”. WSJ asked if 1MDB had indeed paid “nearly US$1 billion” to terminate the options and IPIC’s accounts did not reflect any such payments received, where did the “nearly US$1 billion” go?
According to the March 2014 Financial Statement audited by Deloitte Malaysia, 1MDB claimed the proceeds of US$1.22 billion derived from the redemption of its investment in Cayman Islands was instantly and “substantially utilised to pay debt interest, Aabar options, working capital”. The sum used to redeem the options granted to Aabar Investment PJS, a subsidiary of IPIC, according to both The Edge and WSJ amounted to US$993 million.
However, this payment of nearly US$1 billion was not reflected anywhere in the IPIC financial statements for the year ending December 2014, which was audited by Ernst & Young. Instead, the statements disclosed that 1MDB still owes an additional US$481 million to IPIC for the termination of the said options.
In 1MDB’s responses since the above expose, the company failed to explain the “missing” billion dollars. Instead the company executives tried to obfuscate the matter by claiming that “despite the malicious and wrong second Wall Street Journal article on September 18, 2015, upon payment of the “nearly US$1 billion” deposit by 1MDB, the options over the energy assets have indeed been terminated”.
However, the WSJ never queried the termination of “the options over the energy assets”. WSJ asked if 1MDB had indeed paid “nearly US$1 billion” to terminate the options and IPIC’s accounts did not reflect any such payments received, where did the “nearly US$1 billion” go?
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