1MDB's new board of directors, led by Treasury secretary-general Mohd Irwan Serigar Abdullah, has failed its first test of integrity, said DAP lawmaker Tony Pua.

This is after 1MDB announced yesterday its audited financial statements for 2013 and 2014 can no longer be relied on.

1MDB made the decision after the US Department of Justice (DOJ) filed civil lawsuits last week to seize assets allegedly purchased with funds misappropriated from the state investment arm.

"It is clear from this peculiar announcement, coming hot on the trails of the DOJ expose, was a result of Deloitte finally telling 1MDB that they no longer stand by the March 2013 and 2014 financial statements," he said.

In its statement yesterday, 1MDB also revealed it is seeking a new auditor after Deloitte, on Feb 26, notified its intention to resign.

Deloitte had signed off the 2013 audit report on March 28, 2014, and the 2014 audit report on Nov 5, 2014.

"Hoodwinked" by 1MDB's executives, Deloitte failed to discover several transactions and deals that were carried out, said Pua.

This included 1MDB's US$3.5 billion payments to a fraudulent Aabar Investment PJS Limited, besides 1MDB Global Investment Limited’s US$1.56 billion investment in several dodgy and obscure investment funds.

Conduits in money laundering scam

"DOJ had determined that these funds had acted as conduits in the money laundering scam, including the US$681 million that ended up in Prime Minister Najib Abdul Razak’s personal bank account," he said.

Pua said Deloitte was also led to believe that US$1.22 billion was successfully redeemed from 1MDB’s investment in the Cayman Islands.

"In reality 1MDB was making round-tripping transactions with money from its subsidiary, 1MDB Global Investment Limited," he said, adding this was revealed separately in documents exposed by Sarawak Report.

Pua has filed complaints against Deloitte and another audit firm, KPMG, with the Malaysian Institute of Accountants (MIA).

"Despite the overwhelming evidence, the newly appointed directors led by Irwan are persisting with a massive cover-up of the crimes that have taken place within 1MDB," Pua claimed.

Last week, DOJ filed lawsuits claiming that funds allegedly misappropriated from 1MDB had been used to settle gambling debts, purchase properties, artworks, a yacht and even a plane.

It named four people in its filings - Najib’s stepson Riza Aziz, billionaire businessman and Najib’s family friend Jho Low and two Saudi Arabian officials.

The DOJ also alleged that ‘Malaysian Official 1’, whom it described as a high ranking public official with a position of authority in 1MDB, had received US$731 million siphoned from the state investment firm.

Najib was the chairperson of the 1MDB board of advisers, which has since been disbanded. He also helms the Finance Ministry, which is the sole shareholder of the allegation-riddled firm.

Najib has repeatedly denied abusing public funds for personal gain, and attorney-general Mohamed Apandi Ali has cleared him of any wrongdoing in an earlier investigation into US$681 million found in Najib's bank account.