PETALING JAYA (May 11, 2021): Damansara MP Tony Pua has urged the government to file a suit against former 1MDB auditor KPMG Malaysia for failing to properly audit transactions related to the investment arm’s joint venture with oil company PetroSaudi International Ltd (PetroSaudi). In a statement today, Pua questioned why 1MDB had not included the international audit firm in its long list of civil suits despite having “a clear case” against the company. “Since Deloitte Malaysia settled the matter more than two months ago, 1MDB must commence the legal suit against KPMG immediately,” he said. Previously, Deloitte agreed to a RM320 million settlement with the government for failing to properly audit 1MDB’s transactions from March 2013 to March 2015. “Despite a clear case against KPMG for failing its audit duties, the international audit firm has thus far been recalcitrant and refused to arrive at a settlement with the government,” Pua said, before highlighting some of the issues he had had with KPMG’s work for 1MDB. “KPMG had performed the arguably record-breaking feat of signing off the March 2010 financial audit within three weeks after being appointed in September 2010, after the original auditor Ernst & Young was sacked for refusing to sign off the accounts. “KPMG also failed to take into consideration the material disclosures of the transactions which took place in 1MDB’s then US$1 billion investment to form an aborted joint venture with PetroSaudi in 2009-2010,” he said.

Describe the legal liability that exists in KPMG Malaysia and why it exists. Support your answer with the relevant case.