Deloitte agrees to pay MY govt US$80m to resolve 1MDB scandal

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Deloitte has agreed to pay the Malaysian government US$80 million to resolve all claims related to its fiduciary duty on auditing the accounts of 1MDB and SRC International from 2011 to 2014. According to the Ministry of Finance, the settlement with Deloitte represents the largest 1MDB-related settlement by an audit firm in Southeast Asia.

The firm came under the spotlight for auditing the financial statements of 1Malaysia Development Berhad. At least US$4.5 billion was stolen from the state fund between 2009 and 2014. Malaysian businessman Jho Low, who is still at large, was reported to have masterminded the corruption scheme and used the proceeds to sustain his extravagant lifestyle.

Finance minister Tengku Zafrul Abdul Aziz said this marks another success in the Malaysian Government’s continuing recovery efforts against parties involved in 1MDB, SRC and its related entities. "The Malaysian Government is determined to ensure that appropriate actions are taken against all individuals or entities involved, directly or indirectly, in the global 1MDB scheme," he added. A+M has reached out to Deloitte for comment.

Last July, the Malaysian government reached a settlement with Goldman Sachs worth US$3.9 billion. On 26 February this year, the government also reached a global settlement with AmBank worth about US$699 million related to its involvement in 1MDB, Reuters reported. As of last November, 1MDB was still US$7.8 billion in debt following the scandal, Reuters said.

"These settlements will neither affect nor compromise Malaysia’s claims against individuals like Jho Low and other parties related thereto, and who are still being actively pursued in relation to the 1MDB scandal," the Ministry of Finance said in a statement.

Separately, Goldman Sachs chairman and CEO David Solomon received a US$10 million pay cut in January as a result of the company's involvement in 1MDB. His total annual compensation for 2020 amounted to US$17.5 million. President and COO John Waldron and CFO Stephen Scherr each also received a US$7 million pay cut Goldman Sachs previously described 1MDB as "an institutional failure, inconsistent with the high expectations it has for the firm".

Photo courtesy: 123RF