1MDB Audit Report declassified, several discrepancies revealed (Updated)

PETALING JAYA: The 1Malaysia Development Berhad (1MDB) Audit Report, which was declassified just last night, has indicated several discrepancies in the state investment arm, including several vital decisions that were made without the approval of the Board of Directors (BOD).
The report's executive summary pointed out that 1MDB's corporate governance and internal control were less than satisfactory and that a number of actions by its management and decisions by its BOD were found to be made in an irregular manner (tidak teratur).
"Between 2009 and 2015, several important investment decisions with high investment values were made through 1MDB's BOD without discussions and detailed assessment.
"A number of considerations relating to investments were also made in a short period and with high risk," the report, which was made available to the public through the National Audit Department's website, said.
The report however noted that 1MDB's BOD chairman (which was not named in the report) had informed, in a Public Accounts Committee (PAC) meeting on Jan 19, 2016, that discussions were made before approval was given through a resolution.
The 1MDB's BOD chairman is Tan Sri Mohd Irwan Serigar Abdullah, the former Treasurer Secretary-General who had been transferred to the Public Service Department and had his contract shortened by the administration of newly-minted Pakatan Harapan government.
The report also revealed that in several instances, 1MDB's management had presented incomplete or inaccurate information to the 1MDB BOD before important decisions were made, and that some decisions were made without the board's approval.
There were also instances where the company's management had provided inaccurate or varying information to parties of importance, the report stated.
The report also noted that 1MDB's management had taken actions that were conflicting or without full compliance to the decision of its BOD or shareholders in several occasions in relation to investment.
On 1MDB's management of file maintenance and records, the audit report remarked that it was not done systematically and less satisfactory.
On 1MDB's financial status, the report stated that the company had accumulate a total of RM41.86 billion in loans or financing as of financial year ending March 31, 2014.
"Based on the financial statements for the year ended 31 March 2014, 1MDB internal and external borrowing balance excluding inherited loans amounted to RM33.71 billion comprising eight domestic loans / financing and three overseas financing.
"In addition, 1MDB also took over the existing 11 inherited loans amounting to RM8.15 billion to be borne by the acquisition of two IPP companies in 2012 and 2014," the report stated.
The report however stated that 1MDB had managed to increased its asset position by 363%, from RM9.53 billion in 2012 to RM44.14 billion in 2013.
"The increase was due to the acquisition of two IPP companies, revaluation of real estate investment, increase in bank balance and cash, deposit to Aabar Ltd. and concession services as well as lease receivables.
"According to the 2014 financial statement, asset position increased by 16% to RM51.41 billion due to the acquisition of another IPP company and investment in portfolio fund managers," it stated.
The report stated that the auditing process was faced with limitation as part of the original and important document was passed on or not submitted by 1MDB for the purposes of transaction validation and as audit evidence.
This had brought a significant impact on the audit in terms of verifying the financial position and operations of the company, as well as related transactions.
"Among the key documents that have not been submitted are the 1MDB Group's Management Account for the year ended March 31, 2015 and bank statements from overseas financial institutions," the report said.
The declassification of the report was made following a meeting between Auditor-General Tan Sri Dr Madinah Mohamad and Prime Minister Tun Dr Mahathir Mohamad on Tuesday.
Former prime minister Datuk Seri Najib Abdul Razak was at the centre of controversy surrounding the troubled state fund following allegations of misappropriation amounting to billions or ringgit.
The report was classified under the Official Secrets Act in 2016, which led to outcry from various parties demanding for it to be made public.
The defeat of Barisan Nasional in the recently concluded 14th General Election had paved the way for the new government to revisit the case.