1MDB replaces auditors, gets time extension to submit accounts

PETALING JAYA: Government-backed 1Malaysia Development Bhd (1MDB) has confirmed that it has changed its auditors and that it has gotten a six-month extension from the authorities to file its accounts for the financial year ended March 31, 2013 (FY13).

According to a spokesperson, 1MDB stated that it had been granted an extension of time up to March 31, 2014 from the Companies Commission of Malaysia (CCM) to file its annual returns.

The spokesperson also confirmed reports that accounting firm KPMG had been replaced with Deloitte to complete the audit for FY13.

1MDB, which was started in 2009 with a seed capital of RM5bil – funds raised from the issuance of government-guaranteed bonds – was supposed to have filed the annual returns with the CCM by Sept 30, 2013.

It said that the reason for the delay was because of several new acquisitions that had altered the business direction of the company.

“Since 2012, 1MDB has had a new business direction. It has grown exponentially, requiring the consolidation of several new subsidiaries with large assets worldwide into the 1MDB group,” it said.

1MDB was set up as a strategic investment fund to facilitate investment that would have a high impact on the economy.

The fund, via its subsidiaries, has invested in the power generation sector and property development.

In the property development space, 1MDB has been given the rights by the Government to develop two large tracts of prime land in the city. The parcels are now being developed as the Tun Razak Exchange along Jalan Tun Razak and Bandar Malaysia in Sungai Besi.

It had also acquired powers plants from Tanjong Plc and the Genting group in 2012, taking up huge debts in its book along the way.

But 1MDB has come under scrutiny for funds placed outside the country.

According to the 2012 annual accounts of 1MDB, a sum of US$2.32bil (RM7.67bil) had been placed with a segregated portfolio company in Cayman Islands, something that has caused it to be a target of criticism from many parties, especially the opposition.

On the change of auditors, the spokesperson said that 1MDB had appointed Deloitte to complete the audit for FY13.

“It was mutually agreed with KPMG that the firm would cease to be 1MDB’s auditors. 1MDB thanks KPMG for its services and advice,” the spokesperson said.

No reason was given as to why KPMG, which had been auditing its books since 2010, had decided to relinquish its role as auditor.

On another matter in relation to 1MDB, the Govern-ment said that it had yet to award the 2,000 megawatt coal-fired power plant project called Project 3B.

The Energy, Green Technology and Water Ministry in a statement dismissed talk on 1MDB being awarded the project as “baseless and mere speculation.”

The ministry said the Energy Commission would make an announcement soon on the award. “The process is transparent in line with the competitive bidding system that has been put in place for the bidding of projects by independent power producers, which is to ensure, among others, fairness and competitiveness,” it added.

1MDB is in a neck-and-neck race with YTL Power International Bhd for the rights to build the power plant, with its bid marginally higher at 25.65 sen per kWh as compared with YTL Power’s bid at 25.23 sen per kWh.

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Business , 1MDB , KPMG , Deloitte


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