Securities Commission investigating Deloitte, KPMG over 1MDB scandal, says report

KUALA LUMPUR (Jan 26): Deloitte and KPMG are being probed by the Securities Commission (SC) (pictured) over their role in the 1MDB scandal, reported the South China Morning Post (SCMP) yesterday.

The report quoting a source said the SC is trying to find out if the two audit companies “were aiding and abetting in this scandal, or merely negligent; the accountants must be held accountable”.

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The Hong Kong daily’s report also said that “sources believe that KPMG may be negotiating a deal with the Malaysian authorities”.

Cynthia Gabriel, executive director of the anti-graft group, C4 told the publication that the audit firms involved in 1MDB were “a party to the fraud. The personnel involved should be duly punished. Evidence of wrongdoing has been produced – the auditor-general’s report, the public accounts committee’s report. In fact, KPMG is working at nullifying the audit report 2011-2012”.

For its part, the SC did not go “into details” when contacted by SCMP, saying “that its review of the “conduct of auditors in relation to 1MDB audits is still ongoing”.

It has already been reported that KPMG signed off on 1MDB’s accounts for the years of 2010, 2011 and 2012

Deloitte was appointed in 2013 and 2014 after KPMG was removed from its role after asking for more information about 1MDB’s assets.

On Thursday, officers from the Bukit Aman Commercial Crime Investigation Department (CCID) raided Messrs Rahmat Lim & Partners, the local law firm used by global bank Goldman Sachs in its 1MDB dealings, and left with a box of documents and laptops.

Rahmat Lim were the lawyers representing the US investment banking giant during the issuance of the 1MDB bonds in 2012 and 2013 totalling US$6.5 billion.

Following the raid, Rahmat Lim maintained it had only a “limited role” in representing Goldman Sachs.

Goldman Sachs famously arranged several bonds for 1MDB to earn itself US$600 million.

The company’s chief executive David Solomon recently apologised to Malaysia for Goldman partner's role in the 1MDB scandal.

Finance Minister Lim Guan Eng however said the apology is not sufficient and Goldman Sachs has to make reparation and compensation to Malaysia.