Professional services firm Deloitte is the latest global company to be embroiled in the scandal that depleted Malaysia’s sovereign wealth fund.
The UK-based firm was fined $535,000 Wednesday by the Malaysian government after it allegedly failed to report irregularities found in audits of companies linked to the 1Malaysia Development Berhad fund, according to the Financial Times.
The fund, which was established under Malaysia’s previous prime minister Najib Razak, has come under scrutiny under the new administration, led by Mahathir Mohamad. The Malaysian government is also seeking the whereabouts of Jho Low, who allegedly masterminded the disappearance of $4.5 billion from the fund, which was used to finance a lavish lifestyle and bribe Malaysian officials, according to the U.S. Justice Department.
The Malaysian fugitive, who is believed to be hiding in China, invested in Steve Witkoff’s formerly-owned Park Lane Hotel, and also purchased a $30 million apartment in the Time Warner Center.
Deloitte’s penalty follows that of Goldman Sachs, whose bankers were indicted in November after it was revealed they aided in securing investments in the fund. Goldman, which was the primary bond underwriter for the fund, helped raise $6.5 billion and received almost $600 million in fees for its bond issuance.
Malaysia’s Security Commission condemned Deloitte’s for its role in auditing 1MDB in 2014, when it found irregularities in a $584 million sukuk programme, (effectively bonds that comply with Sharia law) issued by 1MDB subsidiary Bandar Malaysia (BMSB). Deloitte audited 1MDB until 2016, when it resigned.
In issuing four penalties under Malaysia’s capital markets and services act, the agency reportedly said Deloitte failed to immediately report ”irregularities which may have a material effect on the ability of BMSB to fulfill its obligations in repaying sukuk holders any amount.” [FT] — David Jeans