INTERVIEW | 1MDB has gone without presenting its annual report for three years now but its chief executive officer Arul Kanda Kandsamy said there was now "progress" on the issue.

"I have some good news on that front which is, recently, the police have agreed to allow our auditor Parker Randall to sight those documents," he told Malaysiakini in an interview.

1MDB had not furnished its annual report for 2015, 2016 and 2017, on grounds that the police were in possession of key documents which were seized during a raid in July 2015.

Arul Kanda said the audit process had already started and 1MDB's auditors had "one or two" meetings with the police.

However, Arul Kanda could not provide a timeline on when the audit process can be completed.

"I think the most important point is that there is progress...

"It's not a conventional process, where the auditor has to go to the police, so it is not possible to give you an estimate (on when the audit can be done).

"Had we done it at our own office, then you can have a time estimate," he said.

Arul Kanda added that there had been no indication that 1MDB's documents would be returned any time soon, stating that the police investigation was ongoing.

Inspector-general of police Mohamad Fuzi Harun had in September last year said police had completed the 1MDB investigation and that there were no new developments.

However, he issued a statement last month denying Low Taek Jho was linked to 1MDB after the Malaysian businessperson's superyacht Equanimity, which the US Department of Justice (DOJ) alleged was acquired using stolen 1MDB funds.

In that statement, Harun said the investigation on 1MDB was still "ongoing". 

Previous audited reports disowned

But 1MDB's woes was not only about its unaudited annual reports but also audited ones, specifically in 2013 and 2014, which were disowned by its former auditor, Deloitte.

"The complaint (filed by DOJ) contains information, which, if known at the time of the 2013 and 2014 audits of 1MDB, would have impacted the financial statements and affected the audit reports and, accordingly, those audit reports issued by Deloitte Malaysia dated March 28, 2014 and Nov 5, 2014 respectively in connection with the 2013 and 2014 financial statements of 1MDB should no longer be relied upon," Deloitte had said in a statement.

The DOJ claimed at least US$4.5 billion was misappropriated from 1MDB and laundered through the global financial system, including the US.

It is seeking to seize at least US$1.7 billion in assets allegedly acquired using the stolen money.

1MDB has had an unhappy relationship with a string of auditors. KPMG was the appointed auditor for 1MDB's annual report in 2010, 2011 and 2012.

1MDB terminated KPMG's services when it raised questions about certain investments for the 2013 annual report and was about to issue a qualified opinion, according to the Public Accounts Committee (PAC).

In accounting, a qualified opinion is a statement issued by auditors that suggest there was lack of information provided, which meant a company had not maintained the appropriate accounting standards.

However, new auditor Deloitte signed off the 2013 annual report which KPMG had refused to do without a qualified opinion.

Three out of big four fired

Prior to that, 1MDB's auditor was Ernst & Young, which was appointed in March 2009, shortly before the Terengganu Investment Authority was converted into 1MDB.

Ernst & Young’s services were terminated in September 2010 without signing off any financial reports.

The auditor had requested several documents to ascertain the fair value of 1MDB's assets and liabilities for its joint venture with PetroSaudi International (PSI) before its services were terminated.

After claims of alleged irregularities in 1MDB escalated and having already engaged three out of the world's top four accounting firms, the company had trouble finding a replacement. The fourth giant is PricewaterhouseCoopers.

1MDB eventually appointed Parker Randall as its new auditor.

But Parker Randall, unlike the big four, was not a major accounting firm - it comprises a collection of different accounting firms across the globe.

In Malaysia, Parker Randall is represented by local firm Aftaas (Afrizan Tarmili Khairul Azhar), which firms it audited were previously been criticised by the opposition.

Arul Kanda said it will be up to Parker Randall to decide if 1MDB's accounts for 2013 and 2014, which were disowned by Deloitte, must be redone.

"In terms of redoing of the accounts, that's a decision Parker Randall has to make, so it is not a decision that we have to make,” he said.

"I think they would be guided by accounting standards, by the law and so on in determining that. I don't really have an answer to that."

This interview was jointly conducted by Andrew Ong, Kow Gah Chie, Nigel Aw and Steven Gan.

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