Deloitte fined by Malaysian government over 1MDB scandal

Global firm penalized for failing to report irregularities in 1MDB-linked audits

Jan.January 30, 2019 05:40 PM

Jho Low

Professional services firm Deloitte is the latest global company to be embroiled in the scandal that depleted Malaysia’s sovereign wealth fund.

The UK-based firm was fined $535,000 Wednesday by the Malaysian government after it allegedly failed to report irregularities found in audits of companies linked to the 1Malaysia Development Berhad fund, according to the Financial Times.

The fund, which was established under Malaysia’s previous prime minister Najib Razak, has come under scrutiny under the new administration, led by Mahathir Mohamad. The Malaysian government is also seeking the whereabouts of Jho Low, who allegedly masterminded the disappearance of $4.5 billion from the fund, which was used to finance a lavish lifestyle and bribe Malaysian officials, according to the U.S. Justice Department.

The Malaysian fugitive, who is believed to be hiding in China, invested in Steve Witkoff’s formerly-owned Park Lane Hotel, and also purchased a $30 million apartment in the Time Warner Center.

Deloitte’s penalty follows that of Goldman Sachs, whose bankers were indicted in November after it was revealed they aided in securing investments in the fund. Goldman, which was the primary bond underwriter for the fund, helped raise $6.5 billion and received almost $600 million in fees for its bond issuance.

Malaysia’s Security Commission condemned Deloitte’s for its role in auditing 1MDB in 2014, when it found irregularities in a $584 million sukuk programme, (effectively bonds that comply with Sharia law) issued by 1MDB subsidiary Bandar Malaysia (BMSB). Deloitte audited 1MDB until 2016, when it resigned.

In issuing four penalties under Malaysia’s capital markets and services act, the agency reportedly said Deloitte failed to immediately report ”irregularities which may have a material effect on the ability of BMSB to fulfill its obligations in repaying sukuk holders any amount.” [FT] — David Jeans

Related Articles

With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)

Real estate stocks push up this week as U.S.-China trade tensions ease

416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case

Denizen Bushwick at 54 Noll Street (Credit: Google Maps, iStock)

A major Bronx landlord is shorting All Year’s bonds. Are his concerns legit?

CrowdStreet CEO Tore Steen (Credit: iStock)

CrowdStreet hits $1B milestone, crowdfunding firm claims

Jared Kushner and Jho Low (Credit: Getty Images)

Netflix’s “Dirty Money” delves into Jared Kushner, 1MDB scandal

Greystar CEO Bob Faith and the Parkside Place Apartments in Cary, North Carolina (Credit: Greystar and Apartments)

What Greystar’s belief in multifamily says about the health of the economy

Rupert Murdoch and David Doctorow (Credit: Getty Images, iStock)

News Corp. looks to Opcity lead-generation to boost real estate services biz

Clockwise from the bottom left: The Eugene (435 West 31st Street), the Hudson Yards observation deck condominium and 555 Tenth Avenue (Credit: Google Maps)

West Side story: Manhattan’s largest January real estate loans