Malaysia’s government has received RM340.92 million ($80 million) from international accounting firm KPMG in settlement over the firm’s fiduciary duties in auditing the accounts of scandal-hit state fund 1Malaysia Development (1MDB) from 2010 to 2012, its Finance Ministry said on Thursday.
This follows KPMG’s agreement in September last year to settle a civil suit filed by 1MDB over the firm’s alleged negligence and breach of contract in its audit of the state fund’s financial statements.
The settlement with KPMG was described as “one of the largest 1MDB-related settlements by an audit firm in Southeast Asia,” which valued at more than 800 times the audit fees earned by the company.
The ministry said in a statement that the fund was deposited into Malaysia’s Assets Recovery Trust Account, which has received a total of RM19.138 billion ($4.5 billion) in seized funds related to the 1MDB financial scandal.
The funds will be used to settle 1MDB’s outstanding debts, it stated.
1MDB was set up by former Prime Minister Najib Razak when he took office in 2009. It relied primarily on debt to fund investment and economic development projects and was overseen by senior Malaysian government officials.
However, the state fund amassed massive debts, and U.S. investigators allege that at least $4.5 billion was stolen from the fund and laundered by Najib’s associates.
Finance Minister Tengku Zafrul Aziz said in a statement that the government has repaid RM13.3 billion of 1MDB’s debt so far, with RM38.81 billion ($9.28 billion) in debt–comprising principal and coupons or profit for bonds and Sukuk–still outstanding as of Dec. 31, 2021.
“However, the current balance of the Trust Account is sufficient to pay off only the principal amount of the bonds for 2022,” Zafrul said.
“Once all the Trust Account funds are utilized, the government will continue to bear the obligation to pay the balance of 1MDB’s debts, whose issuance was backed by a government guarantee and letter of support,” he added.
The ministry reaffirmed its commitment to recovering the 1MDB asset and allocating adequate funds to manage the national financial burden caused by the 1MDB financial scandal.
Last month, Malaysia’s Court of Appeal unanimously dismissed Najib’s appeal to overturn his conviction and upheld the High Court’s verdict against him.
Najib was sentenced to 12 years in prison and fined RM210 million ($50 million) in July 2020 after being found guilty of transferring RM42 million ($9.9 million) from SRC International, a former unit of 1MDB, into his bank accounts.
He faced seven charges encompassing criminal breach of trust, abuse of power, and money laundering, but pleaded not guilty to all charges and denied any wrongdoing.
Najib has reportedly filed an appeal to the Federal Court against the Court of Appeal’s decision in December last year.
The Associated Press contributed to this report.