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4 Minute Read by (Recasts, adds lawsuit details, background, finance ministry confirmation) Reuters, KUALA LUMPUR, July 9 – According to court documents seen by Reuters, Malaysia’s government and state fund 1Malaysia Development Berhad (1MDB) are seeking over $5.6 billion in damages from KPMG PLT for alleged breaches and negligence related to a corruption scandal at the fund. KPMG denied the allegations on Friday, promising to “vigorously” defend the suit, which was filed against 44 current and former partners and relates to its audit of 1MDB’s financial statements from 2010 to 2012. The suit, filed on Tuesday, is the latest in a series of suits filed by Malaysian authorities to recover billions of dollars missing from 1MDB in a scandal that has implicated high-ranking officials, banks, and financial institutions around the world. “All allegations as reported in the news are refuted, and the claim will be vigorously contested,” KPMG said in an emailed statement to Reuters, adding that the suit had left it “disappointed.” Due to the pending litigation, Malaysia’s finance ministry declined to comment further. It announced in June that it was in talks with the auditor to reach an agreement. A request for comment from 1MDB’s lawyers was not immediately returned. The plaintiffs allege that approximately $3.2 billion was misappropriated from 1MDB and its subsidiaries while KPMG was the firm’s auditor, according to the lawsuit. The money was part of a bigger sum of $5.64 billion taken from 1MDB between 2009 and 2014, according to the plaintiffs, losses that could have been prevented if KPMG had gathered enough evidence to back up its audit findings. According to the plaintiffs, a proper audit by KPMG would have uncovered fraud risk warning signals, which the firm would have been required to report, and would have resulted in the fraud at 1MDB being discovered sooner. The plaintiffs stated that they would seek the whole sum misappropriated, including interest and expenses. Malaysia’s government and MoF Inc, a statutory body under the finance ministry, would also ask KPMG for 2.63 billion ringgit ($627.83 million) in compensation for losses incurred in the bailout of 1MDB. After refusing to sign off on 1MDB’s 2013 accounts, KPMG was fired as the fund’s auditor. It told 1MDB to “immediately take all necessary steps to avoid any further or future reliance on the audit reports provided by KPMG Malaysia for the financial years ended 31 March 2010 to 31 March 2012” in June 2018. Deloitte PLT, which replaced KPMG as 1MDB’s auditor, paid the Malaysian government $80 million last month to settle accusations relating to its dealings with the fund. At least six nations have launched inquiries into 1MDB, the Malaysian investment firm co-founded by former Prime Minister Najib Razak. In a case involving 1MDB, Najib was convicted guilty of corruption and money laundering last year. He denies guilt and intends to appeal the decision. (1 ringgit = 4.1890 ringgit) (Liz Lee and Rozanna Latiff contributed reporting.) Ed Davies and Martin Petty edited the piece.)/nRead More

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