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January 28, 2019

Deloitte and KPMG under investigation for their involvement with 1MDB

By Joe Pickard

Deloitte and KPMG are under investigation by the Malaysian Securities Commission for their involvement with the scandal-ridden 1MDB.

According to the South China Morning Post the Securities Commission are investigating the firms to determine if they ‘were aiding and abetting in this scandal, or merely negligent. The accountants must be held accountable’.

The development company has had a troubled relationship with the Big Four, having reportedly fired its various auditors when they began to raise too many questions over its activities.

In June of last year, KPMG advised the company not to rely on the audits it conducted for the financial years ended March 2010 to March 2012, following the declassifying of a report by the Malaysian Auditor general which had previously been unavailable to the firm.

In November 2018, the Malaysian Institute of Accountants referred Deloitte to a disciplinary committee for further action, following the completion of its investigation into the firm’s audit of 1MDB.

At the time, a spokesperson for Deloitte Malaysia said: "We continue to cooperate fully with all relevant authorities investigating matters associated with 1MDB. We stand by our professionalism, quality, independence and ethics in the services we provide. Given the ongoing investigations by the authorities, it would not be appropriate for us to comment further.”

It is estimated that the company is over $11bn in debt with fraudulent losses said to be around $4.5bn. Former Malaysian Prime Minister Najib Razak is alleged to have used the company to channel $700m into his personal bank accounts.

Subsequently, Malaysian police seized a range of luxury items from six properties across the country which were said to be linked to the former prime minister. These included gold, diamonds and other items at the time were estimated to have a value in excess of $164m.

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