FGV board: Internal audit, not PwC, discovered 'potential contraventions'

PETALING JAYA: Felda Global Ventures Holdings Bhd (FGV) yesterday clarified that potential contraventions of group policies were unearthed by the group’s internal audit and not external auditor PricewaterhouseCoopers (PwC) as stated by its chairman Tan Sri Isa Samad at a press conference on Tuesday.
FGV shares and warrants rebounded yesterday, with its stock closing 4 sen up at RM1.66 with some 62.3 million shares changing hands.
Isa had claimed that PwC found the alleged improprieties in dealings between Delima Oil Products Sdn Bhd (DOP) and Safitex Trading LLC.
In a statement released by the board, however, FGV stated that PwC highlighted the issue of the long outstanding debts of US$8.3 million (RM35.4 million) by Safitex which led to an impairment exposure in its statutory financial audit for the financial year ended Dec 31, 2015, dated Feb 18, 2016.
“This matter has been continuously reported in PwC’s subsequent quarterly review reports. Since then, management had continuously represented that the balance would be fully recoverable. Instead, the balance subsequently increased to US$11.7 million and exceeded the allocated credit limit per PwC’s statutory financial audit for the financial year ended Dec 31, 2016 which was reported to the Audit Committee on Feb 17, 2017,” the board said.
The transactions with Safitex involved the sale of edible oil and fats to Dubai-based Safitex meant for delivery to the Afghanistan market.
Three months after the report on April 20, 2017, the board instructed group’s internal audit to carry out an investigation of this matter and detected potential contraventions of group policies, out of which a decision was made by the board to request four senior officers to go on leave of absence.
To recap FGV board of directors put four of its executives, including its CEO and CFO, on a leave of absence on Tuesday to investigate dealings between DOP and Safitex.
The action was taken after FGV president and CEO Datuk Zakaria Arshad in a letter dated June 5 refused to resign as directed by Isa.