1MDB under the spotlight

1MDB under the spotlight

KUALA LUMPUR - Past and present leaders and auditors of 1Malaysia Development Berhad (1MDB) will be called up. Frequent changes in auditors will be examined. And the entire history of the company since its start in 2009 will come under intense scrutiny by the Public Accounts Committee (PAC), which has begun its probe into the controversial company.

Asked if Prime Minister Datuk Seri Najib Tun Razak or businessman Low Taek Jho, also known as Jho Low, would be called up, PAC chairman Datuk Nur Jazlan Mohamed said "not for now".

"There is no need at the moment. We are looking at the framework of 1MDB's governance first," he said after the PAC began its inquiry into the dealings, mergers and acquisitions of the entity.

Yesterday's session saw Treasury secretary-general Tan Sri Irwan Serigar Abdullah and Economic Planning Unit director-general Datuk Seri Rahmat Bivi Yusoff testifying .

1MDB's former CEO Datuk Shahrul Ibrahim Halmi and current CEO Arul Kandasamy will appear next Tuesday.

"Today's proceedings were focused on the Government's control on the management and investments of 1MDB after it was established in 2009. We will also call the audit firms involved in certifying the financial position of this company," Nur Jazlan told reporters.

The committee has asked the Finance Ministry for the relevant documents to be provided at the next meeting.

Most questions were directed at the ministry, which effectively controls 1MDB.

Members voiced their concern about the huge amount involved and whether procedures were followed.

He gave an assurance that the committee, comprising eight Barisan Nasional and five Pakatan Rakyat MPs, would act objectively.

He said the three different auditors - Deloitte, Ernst & Young and KPMG - would be questioned by the PAC.

"We want to know why there was a frequent change in auditors," he said.

With the investigations going back to 2009, it will trace the events leading to 1MDB's first deal with PetroSaudi International, which is said to be fraught with controversy.

The joint venture between the two was reversed within months, with 1MDB converting its equity stake into debt of US$2.2bil (S$2.9bil).

The debt ballooned and was finally redeemed in 2012 amounting to US$2.3bil. The proceeds from the redemption were placed in funds based abroad. A portion of the money was brought back while some was parked in Singapore.

Nur Jazlan said the probe would first focus on how 1MDB was managed at the ministry, before it moves on to the managers of 1MDB, its auditors and board of directors.

The probe will also cover the allegations around 1MDB's dealings which have caught public attention. There is no time frame for the hearings. The inquiry will cover 1MDB's dealings, transactions, mergers and acquisitions.

Yesterday's meeting lasted over three hours. Besides Nur Jazlan and deputy chairman Dr Tan Seng Giaw (DAP-Kepong), all the other 11 committee members were present.

The PAC had decided at a special meeting on April 30 that it would launch an investigation into 1MDB.

"It's not about protecting political parties but finding out the truth about 1MDB," he said, appealing to the public to be patient.

Nur Jazlan said his committee's work was independent of other probes by the Auditor-General's Department and police.

"Our scope differs from that of the A-G as it is more concerned with the financial management of 1MDB."

Asked if the probe would lead to legal action, Nur Jazlan said if there was anything wrong, the committee would recommend that action be taken. In a recent statement, 1MDB said Deloitte had signed off its 2013 and 2014 accounts without qualification.

It also said KPMG signed off the 2010, 2011 and 2012 accounts with no qualification too.

Deloitte took over the auditing in December 2013 after 1MDB contended that KPMG could not conclude its 2013 accounts.

Ernst & Young, 1MDB's first auditor, resigned in 2011 without a single audit.

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