A-G won’t audit 1MDB, says ‘big’ firm already handling it
BY ANISAH SHUKRY
Published: 12 November 2014
An illustration of the Tun Razak Exchange, a project by 1Malaysia Development Bhd which has been criticised by major investors from Qatar and Abu Dhabi due to the lack of transparency and crawling progress. – Pic courtesy of skyscrapercity.com, November 12, 2014.The Auditor-General's Department will not audit state investment fund 1Malaysia Development Bhd (1MDB) because it is already handled by one of the "big four" international auditing firms, says Auditor-General (A-G) Tan Sri Amrin Buang.
"Why aren't we auditing 1MDB? As far as their accounts are concerned, they are already audited by one of the big four.
"There is no reason for us to come back to ask them to open their accounts again," he said today, adding that to audit any firm was a "very laborious task".
Among its staunchest critics is former prime minister Tun Dr Mahathir Mohamad who had called on Putrajaya to explain how the fund had benefitted Malaysians, especially since it had incurred a RM38 billion debt in just five years of its operations.
In February, 1MDB confirmed that it changed its auditors and got a six-month extension from the authorities to file its accounts for the financial year ended March 31, 2013.
It said it replaced accounting firm KPMG with Deloitte to complete the audit, according to The Star Online.
Yesterday, DAP lawmaker Tony Pua said 1MDB's dismal performance in paying up RM317.3 million for a land acquisition despite repeated extensions was a sign that it was financially stretched.
The Petaling Jaya Utara MP said 1MDB missed the third deadline to pay up for a RM317.3 million land from Tadmax Resources Bhd.
He told reporters in Parliament that 1MDB has had to urgently extend, restructure and refinance RM6.17 billion of debt twice in the past year, and warned that if this continued, 1MDB might default on its outstanding loan of RM42 billion.
Pua said all this was revealed in 1MDB's financial statements for March 2014 submitted to the Companies Commission last week.
According to the statements, 1MDB had to extend the RM6.17 billion loan for six months when it was due for payment on November 22, 2013, and had only managed to pay RM670 million when it was due again in May this year.
"The company had to refinance the loan via a RM5.5 billion term loan facility," Pua said.
Pua added that the Singapore's Business Times had reported that the debt of the sovereign wealth fund had come at an expensive price of 2.5% in interest above the annual cost of funds, besides the RM20 million to RM30 million in upfront fees.
In relation to its failure to pay Tadmax for the land, Pua said 1MDB now risked forfeiting the deposit it paid in deposit to the company, which is the parent company of Kuala Dimensi Sdn Bhd – the main contractor for the controversial RM12.5 billion Port Klang Free Zone.
On Tuesday, PKR secretary-general and Pandan MP Rafizi Ramli also raised concerns over the company's debts, saying that it could face bankruptcy if it continued to record massive losses each year.
He also accused Putrajaya of attempting to cover up the real losses recorded by 1MDB by revaluing the entity's assets.
Rafizi revealed that for the financial year ending March 31, 2014, 1MDB had recorded a loss of RM665 million, which was based on its profit or loss and financial position statements that were audited and filed with the Companies Commission of Malaysia.
"For 2013, the properties revalued recorded an increase of RM2.74 billion which was recorded as profit.
"And for 2014, revaluation of 1MDB's properties and assets totalled RM897 million," he had said, adding that if 1MDB had not revalued its assets in 2013, it would record losses of RM1.96 billion and for 2014, the losses would be RM1.56 billion. – November 12, 2014.
