1MDB scandal: Malaysia fines audit firm Deloitte US$535,000 for ‘serious’ breaches

The firm was also reprimanded by the Malaysian Securities Commission for failing to do its duty and report irregularities

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Published: 4:25pm, 30 Jan 2019Updated: 7:39pm, 30 Jan 2019

Audit firm Deloitte has been issued a reprimand and fined 2.2 million ringgit (US$535,000) by the Malaysian Securities Commission for breaches linked to the 1Malaysia Development Berhad global financial scandal that saw billions siphoned out of state coffers.

The statement confirms an earlier South China Morning Post report which revealed that the statutory regulatory body was investigating auditors who had overseen 1MDB accounts, as part of the government’s corruption dragnet. The commission does not reveal the identities of those subject to an ongoing review as a matter of policy.

The 1MDB logo through the window of a car in Kuala Lumpur. Photo: AFP

Deloitte failed to report irregularities which “may have had a material effect” on the ability of 1MDB subsidiary Bandar Malaysia Sdn Bhd (BMSB) to repay bondholders under a 2.4 billion ringgit Islamic bond programme issued in 2014, the Securities Commission said in a statement on Wednesday.

The firm was auditor for both BSMB and its holding company 1MDB Real Estate, both of which came under the remit of the state investment fund.

Deloitte’s breaches – four in total – were “serious in nature” as it had “failed to discharge its statutory obligations” despite filing a qualified auditors’ report and noting twice that 1MDB was under investigation, the commission said.