Malaysia and 1MDB seek more than US$5.6 billion in compensation from KPMG partners Reuters

(Correct the title and paragraphs 1 and 11 to mention KPMG partners instead of KPMG PLT)

By Rozanna Latiff and Liz Lee

KUALA LUMPUR (Reuters)-According to court documents seen by Reuters, the Malaysian government and national fund 1Malaysia Development Berhad (1MDB) sought more than US$5.6 billion from KPMG partners for alleged violations and negligence related to the fund’s corruption scandal. Compensation.

KPMG denied these allegations on Friday and promised to “actively” refute the lawsuits filed against 44 current and former partners, and are related to the audit of 1MDB’s financial statements between 2010 and 2012.

The Ministry of Finance confirmed that it had filed a lawsuit on Tuesday. This is the latest in a series of lawsuits filed by the Malaysian authorities to recover billions of dollars lost by 1MDB in a scandal involving high-level officials, banks and surrounding officials. Financial institution. world.

KPMG said in an e-mail statement to Reuters: “All allegations reported in the news have been refuted, and this statement will be strongly questioned.” It noted that it was “disappointed” by the lawsuit.

The Ministry of Finance of Malaysia declined to comment further, citing the pending verdict. In June of this year, it said it was negotiating a settlement with its auditors.

1MDB’s lawyer did not immediately respond to a request for comment.

According to the lawsuit, the plaintiff claimed that 1MDB and its subsidiaries misappropriated approximately US$3.2 billion while KPMG was the auditor of the company.

The plaintiff stated that the money was part of the US$5.64 billion that was allegedly withdrawn from 1MDB between 2009 and 2014-if KPMG had obtained sufficient evidence to support its audit results, these losses could have been avoided.

The plaintiff stated that KPMG’s proper audit would reveal warning signs of fraud risks that the company was responsible for reporting, which would lead to faster detection of 1MDB’s fraud.

The plaintiff stated that they will recover the entire amount of misappropriation, including accrued interest and additional expenses.

The Malaysian government and MoF Inc, a statutory body under the Ministry of Finance, will also seek 2.63 billion ringgit (US$627.8 million) from KPMG partners to make up for the losses caused by the rescue of 1MDB.

KPMG was fired as 1MDB’s auditor after refusing to sign the fund’s 2013 accounts.

In June 2018, it stated that it had notified 1MDB to “immediately take all necessary measures to prevent further or future reliance on KPMG Malaysia’s audit reports prepared for the fiscal year ending March 31, 2010 to March 31, 2012”.

Deloitte PLT, which took over as 1MDB auditor after KPMG, paid US$80 million to the Malaysian government last month to settle claims related to the 1MDB transaction.

At least six countries have launched investigations into the 1MDB co-founded by former prime minister Najib Razak.

Last year, Najib was convicted of corruption and money laundering in a case related to 1MDB. He denied wrongdoing and appealed the sentence.

($1 = 4.1890 ringgit)