1MDB and Malaysia sue 44 KPMG partners for $5.6bn
Malaysia govt, its Ministry of Finance and 1MDB are suing 44 KPMG Malaysia partners in a $5.64bn suit for their part in auditing the state investment fund.
The lawsuit, which was filed earlier this week, accused KPMG of committing breaches of contract and negligence in its audit and certification of 1MDB’s financial statements for the financial years between 2010 and 2012, the Edge newspaper reported.
KPMG was removed as auditor after it refused to sign off some of the accounts.
Malaysian law firm Shearn Delamore filed a statement of claim, spanning 148 pages, on the behalf of the various subsidiaries. The lawsuit is the second 1MDB related suit filed by Shearn Delamore.
The statement alleged that over $5.6bn had been misappropriated from 1MDB and its subsidiaries to benefit former Prime Minister Najib Razak and his associates between 2009 and 2014. Of that, around $3.2bn was misappropriated during the period that KPMG was its auditor.
KPMG’s audited financial statements between 2010 to 2012 “did not give a true and fair view” of the state investment fund’s financial affairs, said the claimants. They added that further misappropriations in the subsequent years could have been prevented had KMPG not been negligent.
As of May 6 this year, interest of at least $1.4bn has accrued from the $5.6 billion sum, it added.
Twenty-two civil suits were also filed by 1MDB against various parties in May.
Malaysia last month received $80m from Deloitte in a settlement over the firm’s audit of 1MDB and its former unit SRC International between 2011 to 2014. It also received the first payment of $432m from AMMB Holdings, in settlement over the local lender’s involvement in the 1MDB scandal, according to the finance ministry.