KPMG has paid $80m to the Malaysian government, in the form of an out-of-court settlement, after Malaysia sued the Big Four firm over the 1MDB scandal, which saw billions stolen from Malaysia’s state-backed 1MDB investment fund.
The 1Malaysia Development Berhad (1MDB) scandal saw at least $4.5 bn channelled out of Malaysia’s 1MDB investment fund, by former Malaysian president Najib Razak and international fugitive Jho Low, between 2009 and 2014.
Initially set up by the Malaysian government as a strategic investment vehicle, the 1MDB fund was revealed to be at the centre of one of the “greatest financial scandals” in the world, following a series of investigations by The Sundays Times and the Wall Street Journal which revealed billions had been siphoned from the sovereign investment fund over a five-year period.
Settling the score
KPMG’s payment to the Malaysian government comes after the Anglo-Dutch firm agreed in September 2021 to pay the Malaysian government $80m, in the form of an out-of-court settlement, after Malaysia sued 44 KPMG partners for $5.54 bn, for the role it played in auditing 1MDB between 2010 and 2012.
The lawsuit alleged that a total of $3.197 billion was misappropriated from the 1MDB fund in the financial years 2010, 2011, and 2012, during which period KPMG was responsible for auditing 1MDB.
The Malaysian finance ministry said the $80m sum is more than 800 times the audit fees earned by KPMG for its original work auditing 1MDB.
In June 2021, British accountancy firm Deloitte also agreed to pay the Malaysian government an out-of-court settlement worth $80m, to resolve claims surrounding Deloitte’s role in auditing the 1MDB fund between 2011 and 2014.
KPMG’s payment comes after a Malaysian court last month upheld a conviction against Malaysia’s former president Najib Razak, who was sentenced to 12 years in prison in July 2020 on charges of corruption and money laundering.
Malaysian businessman Jho Low, who is alleged to have masterminded the 1MDB scandal, is believed to be on the run in China. Jho Low has dismissed the charges against himself and Malaysia’s former president as politically motivated.