PETALING JAYA: Following its RM2.83bil settlement with AMMB Holdings Bhd, the Malaysian government has agreed to a settlement of US$80mil (RM324mil) with Deloitte PLT in relation to the 1Malaysia Development Bhd (1MDB) scandal.
In a statement, the Finance Ministry (MoF) said Deloitte PLT had agreed to the settlement to resolve all claims related to its fiduciary duty on auditing the accounts of 1MDB and SRC International Sdn Bhd between 2011 and 2014.
Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz (pic below) said the settlement marked another success in the Malaysian government’s continuing recovery efforts against parties involved in 1MDB and SRC and its related entities.
“The Malaysian government is determined to ensure that appropriate actions are taken against all individuals or entities involved, directly or indirectly, in the global 1MDB scheme, ” he said.
The settlement with Deloitte represented the largest 1MDB-related settlement by an audit firm in South-East Asia.
MoF said the successful out-of-court settlement with Deloitte would expedite the payment of monies to fulfil 1MDB and SRC’s outstanding obligations, which would otherwise be delayed by potentially protracted and costly court battles.
In July 2020, the government successfully negotiated with Goldman Sachs to reach a settlement worth RM15.8bil. On Feb 26,2021, the government also achieved a global settlement with AMMB worth RM2.83bil.
MoF said these settlements would neither affect nor compromise Malaysia’s claims against individuals like Jho Low and other parties related thereto and who are still being actively pursued in relation to the 1MDB scandal.
“MoF would like to thank the Attorney-General’s Chambers, the Securities Commission, Bank Negara, the Royal Malaysian Police Force, the National Anti-Financial Crime Centre, the Malaysian Anti-Corruption Commission and the National Centre for Governance, Integrity and Anti-Corruption for their efforts in achieving this settlement.”
In spite of the near RM3bil settlement, AMMB said, in a statement last week, that it remained financially resilient and has sufficient financial resources to absorb the settlement without having to raise additional equity capital.
As at Dec 31,2020, the estimated proforma impact to Core Equity Tier-1 (CET1) and Total Capital Ratio (TCR) ratio is estimated to be reduced from 13.52% to 11.01% and 16.39% to 13.88%, respectively, after the proposed provision for the global settlement.
The group also remained highly liquid, with a liquidity coverage ratio of 155.8% and net stable funding ratio for all operating entities above 100%.
“As part of the global settlement, we will continue, as we have for the past five years, to strengthen our fundamentals particularly in terms of corporate governance by continuing to improve our systems and processes to strengthen due diligence, ” said AMMB.
Furthermore, the settlement of the legacy matters will enable the group to focus on executing strategies for its business without any distractions. The group said it is also committed to ensure that it continues to deliver value to shareholders, stakeholders and customers.