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June 27, 2018

KPMG Malaysia: former 1MDB audits no longer reliable

By Joe Pickard

KPMG Malaysia has stated that the audits it conducted for scandal hit 1Malaysia Development Berhad (1MDB) for the financial year ended 31 March 2010 to 31 March 2012 should not be relied upon by the company.

The statement made by KPMG Malaysia on 26 June followed the Malaysian Auditor general declassifying a report on 15 May which had been previously unavailable to the firm as it had been classified as secret under the Official Secrets Act 1972.

The Big Four firm was the statutory auditor for the state-owned investment fund from 2010 until it was fired by the company in 2012. It has been reported that KPMG and other Big Four firms were fired by 1MDB for raising too many questions about its activities.  

1MDB is at the centre of a corruption scandal after it was allegedly discovered that the government owned development fund was being used to channel money into former Malaysian prime minster Najib Tun Razak’s personal bank account.

1MDB has been audited by all of the Big Four firms and is currently using PwC as its auditor, which was appointed by the Malaysian finance minister due to it being the only Big Four firm to be so far unaffected by the corruption charges levelled against the investment fund, according to reports coming out of Malaysia

Most recently, Malaysian police seized a range of luxury goods from six properties across the country which were linked to former prime minister Najib. During a press conference held by the Malaysian Federal Commercial Crime Investigation Department on 27 June, it was said that the luxury goods included a range of gold, diamonds and other items.

The actual value of these items is yet to be officially determined, however an estimate has placed the value to be in excess of RM660m ($164m).

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