KUALA LUMPUR, Malaysia (June 29): Datuk Dr Mohd Abdul Karim Abdullah, group managing director and chief executive officer of Serba Dinamik Holdings Bhd, is sitting on estimated paper losses of RM1.5 billion, thanks to the oil and gas engineering firm’s precipitous drop in share price following the discovery of audit problems on May 25. The cautious attitude has spread to the two enterprises in which Abdul Karim is a significant shareholder: KPower Bhd and Sarawak Consolidated Industries Bhd (SCIB).
Abdul Karim owns a 27% share in Serba Dinamik, a 32.36 percent investment in KPower, and a 36.8% stake in SCIB.
While the three stocks have reversed their downward trend today as a result of news that EY has agreed to serve as Serba Dinamik’s independent reviewer, the share values are still much lower than they were before the audit difficulties were initially revealed on May 25.
Abdul Karim owns a billion dollars worth of Serba Dinamik stock. Based on the May 25 closing price of RM1.61, his block of shares is worth RM1.62 billion, compared to RM341.38 million today based on the 34 sen trading price.
As a result, Abdul Karim has been sitting on a RM1.28 billion paper loss in Serba Dinamik since May 25.
Abdul Karim is the chairman of the KPower and SCIB boards of directors. SCIB is active in concrete pipe and pile manufacture, as well as industrialised building systems, whereas KPower is interested in energy and utilities, property development, logistics, healthcare, and technologies.
KPower’s stock has dropped 60.36 percent since it peaked at RM1.69 on May 25.
Based on the closing price of RM1.69 on May 25, Abdul Karim’s stake in KPower was valued at RM245.71 million. In contrast, based on the 67 sen at the time of writing, his share in KPower is worth RM146.33 million. This equates to an RM99.38 million estimated paper loss.
SCIB’s stock price has also dropped, falling 67.57 percent from RM1.48 in the four weeks since May 25.
On May 25, Abdul Karim’s share of SCIB was valued at RM267.22 million. He now has a paper loss of RM180.55 million at SCIB, with his holding valued at RM86.67 million based on today’s 48 sen trading price.
Serba Dinamik’s CEO is embroiled in an auditing dispute with KPMG after the firm’s external auditor discovered inconsistencies worth RM4.54 billion in transactions.
Abdul Karim has stated multiple times that Serba Dinamik’s management has done “nothing improper” in reference to the KPMG audit issue.
He alleged that KPMG did not handle the audit issues properly by bringing them to the attention of the independent directors at the time. He feels that management should respond to the auditor’s questions in order to fix difficulties.
As a result, the corporation hired top lawyer Tan Sri Muhammad Shafee Abdullah to initiate a negligence claim against KPMG. KPMG quit shortly after, citing inability to continue to fulfill its duties independently as the cause. Following the filing of the case, five independent directors resigned.
Serba Dinamik has until Friday to hire an independent reviewer to address the issues reported by KPMG, according to Bursa Malaysia.
EY has agreed to be the independent auditor on the proviso that certain conditions are met.
EY required a written confirmation from Serba Dinamik’s former auditor, KPMG, that cooperation in the form of access and information will be provided to EY for the purpose of understanding the alleged irregularities and anomalies identified, such as the confirmation process of matters sent to identified customers; and the relevant work papers, including confirmations and correspondences in relation to the alleged irregularities and anomalies identified, such as the confirmation process of matters sent to identified customers; and the relevant work papers, including confirmations and correspondence
Serba Dinamik is waiting for a response from KPMG regarding EY’s request.
Also see:
Serba Dinamik reverses its downward trend after EY agrees to act as an independent reviewer under certain conditions.
EY agrees to serve as an independent reviewer for Serba Dinamik on the condition that certain parameters are met.
External auditors for Serba Dinamik flag statutory audit issues for independent assessment. ‘We haven’t done anything illegal,’ Serba Dinamik’s MD claims. Abdul Karim Abdul Karim Abdul Karim Abdul Karim Abdul Serba Dinamik intends to sue KPMG, the external auditor, for claimed carelessness. KPMG has resigned as auditor for Serba Dinamik; it is now up to SC to unearth the truth. Four Independent directors of Serba Dinamik have resigned in protest of the company’s lawsuit against KPMG. Continue reading