Jessica Fino 28 Jan 2019 10:25am

Deloitte and KPMG investigated by Malaysian regulator

The Malaysian financial regulator has confirmed it is looking into the roles of Deloitte and KPMG in the 1Malaysia Development Burhad (1MDB) fund

The Securities Commission said over the weekend that investigations are under way against the two audit firms over their roles in the scandal.

1MDB, the Malaysia government investment fund, established by former prime minster Najib Razak, has been under investigation for its links with corruption, where £3.4bn of funds allegedly went missing.

The regulator said, “In reference to recent news reports, the Securities Commission does not, as a matter of policy, disclose the identity of any party in an ongoing review. Once the review is completed, the SC and Audit Oversight Board will assess the findings and consider the appropriate next course of action.” 

KPMG and Deloitte have been contacted for comment.

The Malaysian Institute of Accountants announced in August that it was also investigating both firms, in a bid to determine if either of them was in breach of the Accountants Act when they signed off the accounts for 1MDB between 2009 and 2014.

In June last year, KPMG revealed that its annual audits of 1MDB between 2010 and 2012 were no longer reliable, after previously classified information became available.

KPMG was fired in 2013, reportedly because it had raised questions over a specific investment.

In 2015, 1MDB stated that Deloitte had signed off 1MDB’s accounts for 2013 and 2014 without any qualification – KPMG had previously not been able to “conclude” the 2013 accounts.

Deloitte resigned from the role in 2016, becoming the third auditor to leave the organisation and EY was fired in 2010 for raising questions similar to KPMG.

Following its resignation, Deloitte said in a statement that information found in a Department of Justice complaint, as part of the global corruption probe, would have impacted the 2013 and 2014 audits had it been known at the time.

The bank Goldman Sachs is facing criminal charges in the country for helping selling 1MDB bonds.

In November, two former bankers and one financier where charged by the US Department of Justice.