1MDB warns its financial statements are 'not reliable'

1Malaysia Development Bhd (1MDB) said on Tuesday its audited financial statements for 2013 and 2014 should not be relied on after US prosecutors said more than US$3.5 billion was misappropriated from the fund during a period that included those years. 1MDB also said its auditor Deloitte is resigning and the company is seeking a replacement, […]

1Malaysia Development Bhd (1MDB) said on Tuesday its audited financial statements for 2013 and 2014 should not be relied on after US prosecutors said more than US$3.5 billion was misappropriated from the fund during a period that included those years.

1MDB also said its auditor Deloitte is resigning and the company is seeking a replacement, according to a statement on Tuesday. It did not give a reason for the departure but said Deloitte, which notified 1MDB in February of its decision, will continue to audit its key subsidiaries.

The Malaysian fund is at the centre of several international investigations into alleged corruption and money laundering by public officials. Prosecutors in at least four countries – Singapore, Switzerland, Luxembourg and the United States – are looking into money flows from the investment vehicle, which was established for national development.

US prosecutors last week detailed an alleged scheme of international money laundering and misappropriation stretching from 2009 to 2015 and announced it is seeking to seize more than $1bn worth of assets it says went through US banks.

“The board remains confident that no wrongdoing has been committed by 1MDB and that the past audited financial statements continue to show a true and fair view of the company’s affairs at the relevant points in time,” the company said.

However, directors decided “as a precautionary measure, the 2013 and 2014 audited financial statements of 1MDB should no longer be relied on by any party, pending final and conclusive determination by a court of law of certain alleged facts, as described” in the US civil suit, it said.

US prosecutors alleged suspected fraud occurred at 1MDB in three phases in which money was laundered through bank accounts in Singapore, Switzerland, Luxembourg and the US.

In 2012, 1MDB officials and others diverted proceeds raised through two separate bond offerings, according to the justice department. More than 40 per cent of the proceeds, or $1.4bn, were transferred to a Swiss bank account belonging to a British Virgin Islands entity. More than $1bn was diverted from another bond offering in 2013, it said.

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