By Pauline Wong

The spotlight has now been trained on auditing firm KPMG as new documents point towards the firm as being complicit in the 1Malaysia Development Berhad (1MDB) scandal. 

Whistleblower site the Sarawak Report in its latest expose revealed documents between joint venture (JV) company 1MDB Petrosaudi Limited (JV company) and 1MDB that showed grave discrepancies in a previous loan agreement, signed between the two.

This discrepancy, it is now claimed, was signed off and approved by KPMG auditors for the March 2010 financial year end.

DAP Petaling Jaya Utara MP Tony Pua in a press conference today said this new evidence suggests that KPMG, the 1MDB auditors and the board of directors colluded to mislead in its 2010 Financial Report.

“In ‘notice of drawing’ documents dated July 23, 2010 and Sept 8, 2010, the notices referred specifically to a ‘Murabaha Financing Agreement dated June 14, 2010’ between the JV company and 1MDB,” Pua, who is also a member of the Public Accounts Committee, said.

However, in the Financial Report for the year ending March 31, 2010, the murabaha financing agreement was dated March 31, 2010 and not June 14.

“If the murabaha loan agreement was only signed on June 14, 2010, why is it that the financial statements for March 210 already claimed that 1MDB shares in the JV company has been converted to murabaha notes on the very last day of the financial year, that is March 31?” Pua added.

Previously, Pua had highlighted that the JV company had been a front to siphon US$700 million from 1MDB to the pockets of tycoon Low Taek Jho’s company, Good Star. The JV company also allegedly ‘converted’ the initial US$1 billion ‘investment’ from 1MDB into murabaha (an Islamic financing method) loans worth US$1.2 billion, after the JV was terminated.

“Further to the documents exposed, there was also an email from Patrick Mahony to the “Project Uganda” team, which included officials from PetroSaudi and 1MDB officials on May 4, 2010, which discussed the various agreements involved in the transaction – the “Murabaha Loan Agreement”, the “PetroSaudi Letter of Guarantee” and the “Letter of Agreement between PetroSaudi and 1MDB”,” he added.

Pua said the fact that the financial statement was signed off by KPMG on Oct 4, 2010 also raises the question of complicity on the part of the auditors in the non-disclosure of the transactions above.

“There is no question that KPMG would have had complete access to the JV agreement and all the relevant material documents which were completed before 31st March 2010 to arrive at its report. The apparent to hide these information from the Financial statements and the failure to red flag the above transactions meant that the KPMG would have failed their duty to protect the interest of the Government and the Malaysian public at large,” he added.