KUALA LUMPUR – KPMG PLT has pledged to “vigorously” contest a US$5.64 billion (RM23.63 billion) suit filed by Putrajaya, 1Malaysia Development Bhd and others.
It also denied allegations of breaches and negligence linked to 1MDB, reported Reuters.
The suit alleged breaches of contract and negligence in KPMG’s audit and certification of 1MDB’s financial statements for 2010, 2011 and 2012. KPMG was removed as the state investor’s auditor after it refused to sign off on the latter’s 2013 accounts.
“All allegations as reported in the news are refuted, and the claim will be vigorously contested,” said KPMG in an email to Reuters, noting that it is “disappointed” with the legal action.
Yesterday, Bernama reported the Finance Ministry as confirming that a writ and statement of claim were filed on Tuesday against 44 individual partners of the Malaysian accounting firm.
A ministry spokesman said the plaintiffs are the government, Ministry of Finance Inc, 1MDB and four of the firm’s subsidiaries.
“The claim is related to 1MDB audit works performed by KPMG for the years 2010 to 2012.
“As the matter is already before the court, the ministry is unable to make further comments in observing the rule of sub judice,” said the ministry in a statement following queries about the suit.
The Edge in May reported that 1MDB and its former subsidiary SRC International Sdn Bhd had filed 22 suits. Among the defendants are former prime minister Datuk Seri Najib Razak, former Treasury secretary-general Tan Sri Mohd Irwan Serigar Abdullah, former 1MDB CEOs Datuk Shahrol Ibrahim Halmi and Arul Kanda Kandasamy, as well as Deutsche Bank and JP Morgan.
Najib’s stepson Riza Shahriz Abdul Aziz, production company Red Granite Pictures Inc and Red Granite Capital Ltd were also named in a suit for misappropriating US$250 million from 1MDB.
The company, along with three of its subsidiaries – 1MDB Energy Holdings Ltd, 1MDB Energy Ltd and 1MDB Energy (Langat) Ltd – named Riza, Red Granite Pictures, Red Granite Capital and Shearman & Sterling as defendants in their writ of summons filed at the Kuala Lumpur High Court on June 7.
In its endorsement of the claim attached to the writ, 1MDB alleged that in 2011 and 2012, Riza and both Red Granite firms received US$250 million from it.
“The first defendant (Riza), who controls both Red Granite companies, knew or ought to have known that those funds had been misappropriated,” said the endorsement.
“They used those funds for their personal benefit and for the benefit of their associates, including for the purposes of financing movie productions and purchasing various real estate.”
Law firm Shearman & Sterling, the fourth defendant, purportedly allowed Riza and fugitive businessman Low Taek Jho, better known as Jho Low, to use their interest on lawyer accounts to launder a substantial portion of the misappropriated funds.
“The fourth defendant had knowledge – being either actual knowledge or knowledge that is to be inferred from wilful blindness or reckless indifference, or alternatively, was put on enquiry and failed to make the necessary enquiries – that the funds in question were the proceeds of crime,” added the endorsement.
Now, 1MDB is seeking a court declaration that Riza is liable to account for the money misappropriated from the sovereign wealth fund, or alternatively, a declaration that 1MDB is entitled to repayment by Riza on the grounds that he was unjustly enriched.
From both Red Granite companies, 1MDB is seeking a similar declaration, that they are liable to account for the misappropriated monies.
It is also seeking damages from Shearman & Sterling over breaches of statutory duties.
Riza and Red Granite made global headlines for producing the Oscar-nominated The Wolf of Wall Street, starring Leonardo DiCaprio. – The Vibes, July 10, 2021
