1MDB doctored its own audit reports, alleges DAP MP

(UPDATED) KUALA LUMPUR, JULY 14: An opposition MP has accused the beleaguered 1Malaysia Development Berhad (1MDB) of doctoring its own audit reports.

DAP Petaling Jaya Utara MP Tony Pua today said that 1MDB’s audited March 2014 financial statements given to the Companies Commission (SSM), differ from those given to a consortium of local banks in relation to a US$1.22 billion (RM4.03 billion) loan it took.

“I call upon all banks which lent money to 1MDB to refer the latest audited financial statements for March 2014 in their possession, provided by the company,” he told a press conference here.

PJ Utara MP Tony Pua

PJ Utara MP Tony Pua

He added that based on the copy of the Audited Accounts obtained from the SSM, the second paragraph of section 18 (ii) on page 93, reads:

“As of the date of this report, the amounts received from the redemption of investments of US$1.22 billion (RM4.03 billion) in the SPC above have been substantially utilised for the purposes of debt interest payment, working capital and payments to Aabar as refundable deposits pursuant to a Settlement Agreement to extinguish the Options Agreements…”

However, Pua alleged that the word ‘substantially utilised’ has been changed to ‘substantially set-aside’ in the copies received by the banks.

“By changing just one word, from “utilised” to “set-aside”, 1MDB has transformed entirely the meaning of the paragraph.  Based on the certified true copy lodged with the SSM, the auditors confirmed that the US$1.22 billion redeemed has been more or less used up,” he said.

“However, by amending to  “set-aside”, the Audited Accounts would provide a false assurance to the lenders that 1MDB has already “set-aside” nearly US$1.22 billion of cash to pay them when the interest and loans become due,” he added.

When asked if he had evidence to prove that the word ‘utilised’ had been changed to ‘set aside’, Pua said he is “making these allegations”, and he “would be happy to be proved wrong.”

“You can ask the banks to verify if the documents contain the allegations I have stated,” he said, adding that he is treading a fine line in the law.

“However, I can say that would be ridiculous for me to make this allegation, which can be easily disproved, if I were not confident (of my allegations),” he said.

He added that he “expected nothing less” than a swift response from 1MDB if his allegations were not true.

Meanwhile, 1MDB in a statement several hours later refuted Pua’s allegations.

“1MDB refers to various statements attributed to Tony Pua at a press conference this morning, as reported in various online news portals today. In particular, he alleges that 1MDB has shared tampered financial statements with banks.

“It is unclear to 1MDB on what basis Pua, a third party who is not a banker to 1MDB – nor privy to the company’s internal dealings, is making such unsubstantiated and damaging allegations against 1MDB.

“We note that YB Tony Pua has declined to elaborate further on the “valid reasons” behind his statements. In any event, interaction between 1MDB and its bankers, including confidentiality obligations, are governed by contract and national law.

“1MDB highlights that no lender to 1MDB has declared an event of default for the reasons highlighted by YB Tony Pua. Furthermore, 1MDB’s official financial statements are publicly available at the Companies Commission of Malaysia (CCM) website. With a few clicks of a mouse, any concerned party can access the documents for verification purposes,” it said.

The company added that it regretted the statements, as it has impacted the day to day operations of 1MDB, a 100% government owned company, and the implementation of the 1MDB rationalisation plan.

– The Rocket

This article was written by on Tuesday, July 14, 2015 at 4:58 pm. You can follow any responses to this entry through the RSS feed. You can leave a response, or trackback from your own site.

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