September 19, 2020

PAC, summon previous 1MDB auditor, too’

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55ddad7de2e059c106097cb69737e993By Tony Pua From Malaysiakini
MP SPEAKS: I would like to strongly welcome Public Accounts Committee (PAC) chairperson Nur Jazlan Mohammad’s statement in The Edge Weekly, seeking to obtain answers from 1Malaysia Development Berhad (1MDB) over their precarious financial position.
Nur Jazlan (right) said the problems faced by 1MDB in settling its debt have raised a lot of questions that will have to be explained.
This is despite the fact that 1MDB may have settled its immediate RM2 billion-outstanding debt with a speculated loan from local billionaire Ananda Krishnan, as it reflected the direness of 1MDB’s financial position.
In addition, it is an extremely wise move by the PAC chairperson to summon 1MDB’s external auditor, Deloitte Malaysia, to provide an explanation for 1MDB’s liquidity crunch.
This will also ensure that whatever answers given by 1MDB to the PAC will be verifiable with their independent auditor.
At the same time, we are certain that Deloitte Malaysia will be the best placed party to enlighten the PAC members as to how 1MDB found itself in such financial distress, despite Deloitte giving the company a clean bill of health on Nov 3, 2014.
The question for Deloitte Malaysia is – how is it that the financial state of a company the size of 1MDB could be signed off as a going concern, yet could so quickly and suddenly be hit by such a liquidity crunch?
Based on the report, 1MDB had a total “cash and bank balances” of RM3.85 billion, while the company had also “redeemed” their US$1.1 billion (RM3.9 billion) investment in the Cayman Islands.
unnamed-1Yet, 1MDB was unable to immediately repay its borrowings due less than 30 days after the audit report was signed. I’m sure the PAC would be very interested to know where all the money went.
I would also like to propose that apart from Deloitte, the PAC should also summon KPMG – who audited 1MDB for the financial years 2010 to 2013. Besides the 2010 report where KPMG raised an “emphasis of matter”, the auditor gave 1MDB a clean bill of health for all its subsequent reports.
‘Mysteriously allocated funds’
It was in those years where 1MDB first invested with an unknown Middle-Eastern company, Petrosaudi International, before the funds were mysteriously reallocated to an investment fund in the Cayman Islands.
KPMG would also be able to enlighten the parliamentary committee as to the reasons why they had resigned as 1MDB’s auditors at the end of 2013.
The testimony of the auditors will be especially crucial to uncovering the truth behind 1MDB’s RM42 billion of accumulated debts.
This is because it has been reported by The Sarawak Report that 1MDB has acted to erase all historical data and email communication records from all personal computers and handheld devices belonging to their employees, as well as their own email servers.
If the above report is true – and it has not been denied by 1MDB – then the records held by the auditors would be critical towards determining the true position of the company.
We are highly confident that given the previous experience of international audit firm Arthur Andersen – which collapsed after being discovered to have shredded documents relating to its audit of failed energy company, Enron – both KPMG and Deloitte would have taken steps to protect the integrity of all the relevant documents in their possession.
Since 1MDB chief executive officer Arul Kanda Kandasamy (left) has openly welcomed public scrutiny as “a good thing that will only serve to strengthen the company and its governance”, we will certainly look forward to 1MDB’s date with a bi-partisan PAC to prove that the company has nothing to hide.
Surely, there is no better way for 1MDB to engage in the most “responsible manner”, sought by Arul.
TONY PUA is DAP national publicity secretary and Petaling Jaya Utara MP.
For more on this story go to: http://www.malaysiakini.com/news/289454

Related story:

The public’s not stupid, 1MDB told
FMT Reporters From Free Malaysia Today News
Umno’s Khairuddin Abu Hassan demands answers to two simple questions.
PETALING JAYA: 1MDB CEO Arul Kanda Kandasamy was today accused of insulting the public’s intelligence with his statements regarding the financial health of the government-owned company.
A prominent 1MDB critic, Khairuddin Abu Hassan of Penang Umno, said Arul has failed to answer basic questions about the company in any of the public statements he had given.
Referring to the CEO’s invitation to critics to engage personally with him, Khairuddin said: “Why should we waste time meeting Arul for clarification? He would only twist facts instead of responding to issues raised.”
He said the public had two “simple and easy” questions for Arul: “Why must 1MDB borrow money to settle its debt?” and “Where are the funds said to have been fully repatriated from the Cayman Islands?”
Khairuddin, the vice-chairman of Batu Kawan Umno, became prominent when he made a police report seeking investigation into 1MDB’s management of its funds. He followed up with a report to the MACC.
In a telephone interview with FMT, he noted Arul’s statements assuring the public of 1MDB’s financial stability and the integrity of its performance as a development fund.
“Unfortunately,” Khairuddin said, “the company has had to borrow to settle its RM2 billion debt with Maybank and RHB Capital.” This meant that Arul’s statements were attempts to “straighten a wet thread,” he said, using a Malay proverb.
Referring to the RM8.3 billion allegedly repatriated from the Cayman Islands, he noted that neither Arul nor any member of 1MDB’s board of directors has given an answer to the question regarding to where the funds are being kept now.
“It’s not a small amount,” he said, adding that the mismanagement of the funds could have a devastating effect on the national economy.
“I challenge Arul Kanda to give a clear statement which lists all of 1MDB’s debts, inside and outside the country,” he said. “This list should be open to public scrutiny. Similarly, there must be a list of all of 1MDB’s assets so that the public can clearly understand its current position.
“Arul Kanda must also clarify his position in 1MDB and the terms of his employment. Is 1MDB paying him a salary or is he with the company only to protect the interests of a finance corporation in Abu Dhabi?”
Arul previously served as Executive Vice-President and Head of Investment Banking at an Abu Dhabi commercial bank.
“1MDB must learn to be transparent in its administration and spending of 1MDB funds,” Khairuddin said. “1MDB is not a private company, but is 100% owned by the Finance Ministry. All Malaysians therefore have the right to ask questions about its real financial position.”
He also said the company had nothing to do with Umno or Prime Minister Najib Abdul Razak. “Although Dato Seri Najib chairs its advisory board, 1MDB is managed on a day-to-day basis by a panel of executive managers and its board of directors.”
For more on this story go to: http://www.freemalaysiatoday.com/category/nation/2015/02/16/the-publics-not-stupid-1mdb-told/
See iNews Cayman related story with links to others published February 15 2015 “Ananda settling 1MDB loan still a question mark” at: http://www.ieyenews.com/wordpress/ananda-settling-1mdb-loan-still-a-question-mark/

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