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KUALA LUMPUR, December 24 – Audit firm Deloitte PLT ruled in High Court today to challenge the fine of 2.2 million ringgit imposed by the regulator Securities Commission (SC) last year for alleged rulings related to the audit of a subsidiary of 1Malaysia Development Berhad (1MDB), a report has said.
According to news portal Malaysiakini, High Court Judge Datuk Seri Mariana Yahya decided today that the fine of 2.2 million ringgit was valid and dismissed Deloitte’s legal challenge.
On January 30, 2019, the SC reprimanded Deloitte and imposed RM2.2 million in penalties on the audit firm for four breaches of the law for its breach of the Capital Markets and Services Act 2007 (CMSA) during its audit of a RM2.4 billion Islamic bond issued by the 1MDB unit Bandar Malaysia Sdn Bhd (BMSB).
Bonds are typically when the issuing company goes into debt to raise funds, and the company must ultimately repay the full sum of the amount borrowed along with regular interest payments.
Deloitte was the auditor of BMSB and 1MDB Real Estate Sdn Bhd (1MDB RE) for the financial years ended March 31, 2015 to 2016, with 1MDB being the parent company of both firms and 1MDB RE (now TRX City Sdn Bhd) a from third-party security providers of Islamic bonds and BMSB’s immediate holding company.
According to the CV, two of Deloitte’s breaches were the failure to immediately inform the CV of irregularities that may have a material effect on BMSB’s ability to meet its repayment obligations to Islamic bond holders, despite from Deloitte notes on BMSB. and the audited financial statements of 1MDB RE and the auditors’ report in 2015 and 2016 of the ongoing investigations into 1MDB and the failure of the audit firm to obtain sufficient and appropriate audit evidence to determine whether the progress made to 1MDB of the Islamic bond could be recovered.
The SC imposed the maximum fine of 2 million ringgit for these offenses.
The SC had also said that it had imposed a fine of RM200,000 on Deloitte for the two remaining infractions for failing to send BMSB’s audited financial statements in 2015 and 2016 to MTrustee Bhd within seven days of delivery of the same documents. to BMSB.
Deloitte had previously said that it had requested the SC to review the administrative penalties, and that on November 14, 2019 it filed a request for judicial review against the SC’s rejection of its request for the review of administrative penalties in the form of RM2. 2 million fines and to seek clarity on how relevant laws are applied for the benefit of the company and other stakeholders in the capital markets.
In its request for judicial review, Deloitte repeatedly sought to have the court overturn the SC’s August 19, 2019 review decision to uphold the RM2.2 million fine, as well as a court order to overturn the review decision.
Deloitte had also reportedly requested a refund of the fine of Ringgit 2.2 million it had paid to the SC.
On November 25, 2019, the Kuala Lumpur High Court allowed Deloitte to proceed with its request for judicial review by granting permission.
This request for judicial review was dismissed today by the Superior Court.
