KPMG denies alleged breaches, negligence after reported 1MDB lawsuit

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Audit firm KPMG PLT denied on Friday allegations of breaches and negligence in relation to state fund 1Malaysia Development Berhad (1MDB) and pledged to “vigorously” contest a reported US$5.64 billion lawsuit filed against 44 current and former partners.

The suit filed by the Malaysian government, 1MDB and several subsidiaries alleged breaches of contract and negligence in KPMG’s audit and certification of 1MDB’s financial statements for the years 2010 to 2012, financial daily The Edge reported, citing a 148-page statement of claim.

KPMG was sacked as 1MDB’s auditor, after it refused to sign off on the fund’s 2013 accounts.

“All allegations as reported in the news are refuted and the claim will be vigorously contested,” KPMG said in an email to Reuters, noting it was “disappointed” with the suit.

Reuters was unable to immediately verify The Edge’s report.

Malaysia’s Finance Ministry did not immediately respond to requests for comment. In June, it said it was negotiating a settlement with the auditor.

Lawyers for 1MDB did not immediately respond to a request for comment.

KPMG in June 2018 had said it had informed 1MDB to “immediately take all necessary steps to prevent any further or future reliance on the audit reports prepared by KPMG Malaysia for the financial years ended 31 March 2010 to 31 March 2012”.

Malaysian authorities have filed a series of lawsuits in a bid to recover billions of dollars missing from 1MDB in a scandal that has implicated high-level officials, banks and financial institutions around the world.

1MDB in May filed 22 civil suits seeking to recover more than US$23 billion in assets from entities and people allegedly involved in defrauding the fund and its ex-subsidiary, including units of global banks Deutsche Bank and JP Morgan.

Deloitte PLT, which took over as 1MDB’s auditor after KPMG, paid US$80 million to the Malaysian government last month to settle claims related to its dealings with 1MDB. – The Edge Markets


Earlier report: July 9, 1MDB, Malaysian govt sue KPMG partners for US$5.64b