Thursday, July 29, 2021

Serba Dinamik vs KPMG: Losing the battle to win the war


Kuala Lumpur, 29 Jul: The last time I wrote about the Serba Dinamik-KPMG saga was exactly a month ago. In that posting, I quoted a notorious accountant whose identity is known only to me:

"I think it's time for corporations to fight back. For too long, they have abused their positions. Some have even held companies to ransom. Good time for the Big Four to burn."In Malaysia, a company claiming to be have been wronged by KPMG takes on one of the world's Big Four accounting firms - June 28).  

Troubled by my posting and (especially) the above quotes, a good buddy AA (not Azmin Ali, my good buddy is way smarter and better looking) dropped a note in our group chat. I promised to publish his comments on this blog but I wanted to let events on the KPMG-Serba Dinamik front unfold first.

True enough, a lot of shit has been hitting the fan since then.

So, a promise is a promise and here is what my good buddy AA has written to me:
Bro Rocky, I have been on both sides of the table (as auditor and as corporation's CFO/Director) and I can tell you that this is a dumbass response. Auditors have (to) do their work according to Auditing Standards just as judges have to rule according to the law regardless of whether it is good/bad law /standard. Serba Dinamik's chairman and CEO were very unprofessional in their press conference.
KPMG's work would have been sub-standard and shoplot like as claimed by the chairman had KPMG not verified the revenue. KPMG has grounds to sue Serba Dinamik for defamation.
Auditors are not in a position to hold any company to ransom. Nothing to gain from ensuring compliance by companies and they can be replaced (and so lose their fees). I argue with auditors but nonsense to accuse them of abusing their position. Auditors simply don't have much room for discretion with the kind of auditing and accounting standards (including stupid ones) we have today.
When AA wrote the above, Serba Dinamik was the only party taking KPMG to court [for alleged negligence and breach of duties - Serba Dinamik blames the external auditors the huge loss in its market cap, estimated at some RM5 billion at one point). The Malaysian Institute of Crorporate Governance viewed Serba Dinamik's legal action against one of the Big Four as unusual, regrettable - "a view that it believes will be shared by the regulators" - and perverse, even. Institute of Corporate Directors Malaysia chairman Zarinah Anwar even hinted that the blame (for Serba Dinamik's limit-down) should be shouldered by the company's board of directors (Board should not 'side-step' issues raised by auditors). 

Today, the Malaysian Government is also a party that has started legal proceedings against KPMG and is demanding a whopping US$5.6 billion in damages.

Is the Securities Commission's AOB doing its job without fear or favour?
Are the guys at Minority Shareholders Watchdog Group  still sleeping?
Pak Pandir fund managers rule EPF?
Will Petronas drop KPMG now that the Malaysian Government is taking it to court?
Tony Pua throws KPMG under the bus, urging Putrajaya to exclude the auditing firm from any government tenders until the court matter has been resolved.

And all these before the ex-KPMG man, ex-Serba Dinamik director appeared in court for the criminal intimidation charges. Surely, there are no angels in this saga. 

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