Tuesday 26 June 2018 3:38 pm

KPMG says audits for scandal-hit Malaysian 1MDB fund not ‘true and fair’ assessment

Big four accountant KPMG has told under-fire Malaysian state fund 1MDB that its audits for three years do not provide an accurate picture and should not be relied upon.

The fund is at the centre of a massive political and financial scandal and currently faces money laundering investigations in six countries including the US.

It was founded by former prime minister Najib Razak who last month was defeated in an election by Prime Minister Mahathir Mohamad who has reopened an investigation into the scandal.

Mahathir has vowed to bring back billions of dollars allegedly stolen from the fund and to punish the culprits.

“The 1MDB financial statements for the financial years ending March 2010, 2011 and 2012 audited by KPMG do not provide a true and fair assessment of the company,” KPMG said in a 8 June letter, 1MDB said.

It said 1MDB should “immediately take all necessary steps to prevent any further or future reliance” on the three audit reports, 1MDB said.

“According to KPMG, they reached the above decision after going through the recently declassified auditor general’s report on 1MDB and other relevant documents that were withheld from them by the previous management,” 1MDB added.

On 15 May Malaysia declassified the government audit of 1MDB which showed that senior officials withheld information from its board and took some decisions without the board’s approval.

KPMG also told 1MDB that if the documents had been disclosed to the auditors, the audit firm believed the information “would have materially impacted the financial statements and the relevant audit reports”.

KPMG said in a statement that it was the auditor of 1MDB and it issued audits for the financial years ended 31 March 2010 to 31 March 2012.

It said that in December 2013, during the audit of the financial statements for the year ender 31 March 2013 its appointment was ended.

KPMG Malaysia said it “has, and continues to, fully cooperate with all relevant authorities investigating matters associated with 1MDB. Given the ongoing investigations by the authorities, it would not be appropriate for us to comment further.”

The US Department of Justice has alleged in lawsuits that more than $4.5bn (£3.4bn) from 1MDB was laundered through a complex web of transactions and shell companies, of which $681m ended in Najib’s bank account.

Najib faces the possibility of bribery charges but denies all wrongdoing.