Deloitte fined over half a million dollars in Malaysia 1MDB fall-out

01 February 2019

Malaysian regulators have fined Deloitte more than half a million dollars for failing to report irregularities in its audits of scandal-hit state-fund 1MDB.

Big Four professional services firm Deloitte has copped a 2.2 million ringgit rap across the knuckles – equivalent to roughly US$540,000 – from the Malaysian securities commission for the firm’s failure to immediately report irregularities uncovered during audits surrounding scandal-hit state-fund 1MDB. The fund remains subject to investigations around the globe for the alleged misappropriation of up to $4.5 billion in assets.

The former auditor of Bandar Malaysia Sdn Bhd (BMSB) and its holding company and 1MDB subsidiary 1Malaysia Development Berhad Real Estate, Deloitte has been handed the maximum fine by the Securities Commission for failing to ‘discharge its statutory obligations’ in relation to irregularities in the ~$580 million Islamic Sukuk Murabahah bond issued by BMSB, detected during audits for the financial years ending March 2015 and 2016.

The Malaysian regulator also imposed an additional RM200,000 fine for Deloitte’s failure to forward copies of Bandar Malaysia’s 2015 and 2016 financial statements to the sukuk’s trustee in due time, stating that it found the breaches committed by the professional services firm to be serious in nature.  Deloitte resigned from its role following the 2015/2016 audits and later stated that its 1MDB reports from 2013 and 2014 should no longer be relied on.Deloitte fined over half a million dollars in Malaysia 1MDB fall-outWhile Deloitte’s significant reprimand is just the latest fall-out from in the ongoing saga, which has seen former Malaysian Prime Minister Najib Razak's deposed and imprisoned for his alleged $700 million role in the corruption scandal, and, more recently, prompted Malaysian authorities to seek some $7.5 billion in reparations from Goldman Sachs for its work with 1MBD, there is still much to play out – with another former auditor KPMG reportedly next in the firing line.

The 1MBD auditor from the years 2010 to 2012, and likewise since declaring its reports unreliable, KPMG has been confirmed by the Securities Commission to be currently under investigation, with some reports suggesting that the firm may be in the process of negotiating a deal. KPMG was dismissed by 1MBD directors in 2013 over an apparent conflict concerning valuations, the same scenario which befell the fund’s original big-name auditor Ernst & Young.

Sacked in 2010 before it could file its first financial statement, EY was originally brought in as auditor for 1MBD predecessor Terengganu Investment Authority (TIA – which rebranded on federal expansion, the ‘1’ in 1MBD intended to signify the benefit for all Malaysians), with TIA likewise subject to local and international probes – thanks to its infamous advisor and alleged money-laundering mastermind Jho Low, now an international fugitive. Boston Consulting Group also served as an early advisor.

While yet to issue a public statement since receiving the fine, Deloitte Malaysia said in an earlier message from November, “We stand by our professionalism, quality, independence and ethics in the services we provide,” with both Deloitte and KPMG previously stating that they would fully cooperate with Malaysian authorities during the 1MBD investigation. BCG and EY meanwhile have not been accused of any negligence or wrongdoing.


EY launches six-month financial services start-up incubator in Singapore

19 March 2019

Professional services firm Ernst & Young is launching a start-up incubator programme in Singapore, with applications now open.

Following a successful first up launch in Sydney last year, global professional services firm Ernst & Young is now bringing its start-up incubator programme EY Foundry to its wavespace hub in Singapore, with applications for the six-month, rent-free residency open to eligible early-stage start-ups in the accounting, tax, fintech, legal- and reg-tech sectors open until the 26th of next month.

Kicking off in June, and with access to up to $120,000 worth of Microsoft Azure credits to build their technology stack, successful applicants will undertake a tailored learning programme based on EY’s deep business insights and tech collaboration know-how to further develop their own technology and accelerate cross-border growth, working alongside EY professionals and fellow entrepreneurs.

“We are excited by how our experience, scale and resources can help to unleash the potential of emerging technopreneurs in this space, and the difference this can make to Singapore's overall innovation footprint,” said EY Singapore’s Head of Tax Soh Pui Ming, adding; “Singapore has a vibrant start-up ecosystem and is well-connected with other innovation hubs in the region.”EY launches six-month financial services start-up incubator in Singapore To be eligible for the EY Foundry programme, aspiring entrepreneurs working in the tax, accounting, finance and law spaces should ideally have a technology or product-related start-up with a working prototype (or be working towards one) which is scalable internationally, with space limited to a maximum four employees per company. Eligibility to work in Singapore is also a requirement.

The inaugural Sydney cohort consisted of six participants from four start-ups, yet according to EY, the firm’s incubator space at its cutting-edge wavespace centre can comfortably accommodate between 15 and 20 people. Among other areas, practical elements of the programme include guidance on raising capital and M&A, company law essentials, R&D tax incentives, and pitching practice sessions.

While EY doesn’t provide any direct funding – and neither does it take an equity stake – participants will also receive support with networking and the opportunity to pitch to EY leaders. “By working with the smartest talent in the start-up space, we are unlocking new markets and innovation, building new relationships and ultimately better serving clients,” said EY Asia-Pacific tax innovation leader Jon Dobell.

Related: EY matchmaking platform helps raise $12 billion for ASEAN start-ups.