KPMG to pay Malaysian govt US$80m in 1MDB settlement

KPMG is paying a settlement valued at US$80 million to resolve all claims related to its fiduciary duties on auditing of 1Malaysia Development (1MDB) accounts from 2010 to 2012. The Ministry of Finance said in a statement that the settlement with KPMG, valued at more than 800 times the audit fees earned by KPMG, "represents one of the largest 1MDB-related settlements by an audit firm in Southeast Asia".

Finance minister Tengku Zafrul Aziz said this demonstrates the government’s resolve to diligently pursue recovery efforts against all parties involved in 1MDB and its related entities. “The recent political developments have not affected the Malaysian government's determination to ensure that appropriate actions are taken against all individuals or entities involved, directly or indirectly, in the global 1MDB scheme,” he said.

The settlement concludes the civil suit filed on 6 July this year against KPMG, which MoF said will expedite the payment of monies to fulfil 1MDB's outstanding obligations, and save the court's time and public resources. According to MoF, this settlement will not affect or 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 financial scandal.

In June this year, Deloitte also paid US$80 million to MoF in a 1MDB-related settlement. The US Department of Justice also remitted about US$452.36 billion seized in matters related to 1MDB in May this year.

Meanwhile, Goldman Sachs imposed a US$10 million pay cut on its chairman and CEO, David Solomon in January this year as a result of the firm's involvement in 1MDB. His total annual compensation for 2020 amounted to US$17.5 million. While Solomon was neither involved nor aware of Goldman Sachs's participation in any illicit activity when the firm arranged the 1MDB bond transactions, the board still viewed the 1MDB matter as "an institutional failure, inconsistent with the high expectations it has for the firm".

Photo courtesy: 123RF

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