KPMG finds evidence of possible irregular transactions in Mudajaya

  • Business
  • Wednesday, 17 Jun 2015

KUALA LUMPUR: KPMG’s forensic audit of Mudajaya Group Bhd has found evidence of breaches of duties and obligations and inappropriate conduct.

Mudajaya told Bursa Malaysia that KPMG, which submitted its report to the company’s board on Wednesday, had found “evidence to suggest, on a prima facie (first glance) basis, that there have been breaches of duties and obligations and inappropriate conduct.”

“The findings of the investigation suggested that the irregular transactions were the conduct of a former employee and did not reveal any clear evidence of collaborated fraud,” said the construction firm and power plant operator.

Mudajaya on March 20 announced that an internal management working group had revealed an isolated case of irregular transactions in one project involving a former employee and had engaged forensic accountants KPMG to conduct a follow-through investigation.

“The board had earlier lodged reports with the relevant authorities and will assess initiating legal proceedings where appropriate. The board has been advised to keep confidential the details of the report and the nature of such proceedings so as not to adversely affect the investigation by the relevant authorities,” it said.

The KPMG report also confirmed that all financial impact to the group had been adequately accounted for and no additional provisions were required to be made.

Mudajaya noted that the unaudited financial results for the year ended Dec 31, 2014 which were announced on Feb 27 did not differ from that of the audited financial statements announced to Bursa on April 30. (The group sank into a net loss of RM70.2mil in 2014, its first loss in at least five years, attributed to additional costs incurred due to acceleration of works and higher construction-related costs for local projects.)

KPMG, in its report, has also highlighted areas for improvement in the organisation’s internal control.

“The group has since initiated improvements to its internal control procedures as well as a review of its organisational and reporting structure with the aim of providing and promoting a culture of ownership and accountability across the group, strengthening the levels of controls and enhancing the board’s oversight of its operations,” Mudajaya said.

It said continuing remediation actions included realignment of the organisational structure to improve risk management, and the start of operational improvements including enhancing project bidding processes, tightening of control over project costs and strengthening of project management.

Mudajaya closed 2 sen lower at RM1.23 on Wednesday.

(Also see other online story on Mudajaya AGM - “Mudajaya keen to explore 1MDB power assets if price is right”.)

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