1MDB: Three audits assessed to be 'not true and fair' by KPMG

Malaysia's troubled state fund 1Malaysia Development Berhad (1MDB) said yesterday that its audit reports for the financial years ending March 2010, 2011 and 2012 done by KPMG are not to be relied on.

These statements "do not provide a true and fair assessment of the company", it said in a statement.

It explained that it had received a letter dated June 8 from audit firm KPMG, advising it to "immediately take all necessary steps to prevent any further or future reliance" on the three audit reports.

KPMG said it had come to this conclusion after going through the recently declassified Auditor-General's report on 1MDB and other relevant documents withheld from it by the previous management of the company, 1MDB said in its statement.

If the documents had been disclosed to the auditors, KPMG believed the information "would have materially impacted the financial statements and the relevant audit reports", 1MDB quoted KPMG as saying.

"KPMG has advised us that 1MDB should notify the relevant authorities on the latest status of the audit reports," it added.

Tun Dr Mahathir Mohamad had ordered a probe into the state fund after his coalition won the Malaysian general election on May 9. Later in May, the Auditor-General's declassified report showed that debts accumulated by 1MDB, inclusive of interest, amounted to RM74.62 billion (S$25.2 billion) in 2015 and posed a risk to government coffers.

It was also discovered that senior officials at 1MDB had withheld information from its board and made decisions without board approval, and that 1MDB was overly reliant on borrowings which burdened the company and was not sustainable as it did not have sufficient earnings.

The administration of former prime minister Najib Razak had classified the 2016 government report under the Official Secrets Act.

1MDB was set up in 2009, soon after Datuk Seri Najib became premier, and was meant to focus on development projects.

In a separate statement, 1MDB announced the appointment of Datuk Asri Hamidon as its new chairman, as well as the formation of a new executive committee.

Datuk Asri is also currently the deputy secretary-general overseeing government investment at the Treasury of the Finance Ministry.

A version of this article appeared in the print edition of The Straits Times on June 27, 2018, with the headline '1MDB: Three audits assessed to be 'not true and fair' by KPMG'. Print Edition | Subscribe