Can the “not comprehensive” audit save Selangor MB from Talam scandal?

In July, MB Khalid told the people that five local audit firms of international standing will be appointed by the Selangor state government to review the Talam’s RM676 million bail out.

After 2 months, the promise is not fulfilled.  

The People only see the sole declaration from KPMG Transaction and Restructuring Sdn Bhd (“KPMG”) which  is of the view that the Selangor state government made a sound commercial decision under the circumstances at that point in time.  The other four auditors are apparently silent on whether the decision is sound at that point in time or at the point in time now.

In fact, the declaration of KPMG had raised more questions than answers to the questionable valuation of Talam bail out.  What scope of work had been performed by the auditors?  Is it a full scope audit or merely a review of the information given by the state government?  Has the auditor “reviewed” the white paper which is delayed for 2 years? Why the review of the auditor can be completed if the state government said the white paper is still in the process?

The People on the street may not be able to tell the difference between full scope audit and review.  But for all the professionals and accountants out there, they know a review can be merely based on the information provided by the state government, and there is no third party confirmation requested from the independent valuer as well as the state valuation department. 

On Wednesay, Khalid announced that KPMG auditors found that the Selangor government made “a sound commercial decision” in its debt recovery exercise involving Talam.

However, KPMG’s advisory unit executive director Chan Siew Mei admitted that the scope of the review, which was conducted over a period of a month, was strictly to check transactions and supporting documents.

Referring to KPMG’s latest remark,  the Selangor Barisan Nasional coordinator Datuk Seri Mohd Zin Mohamed revealed the truth to the People that the investigation by state appointed independent auditor only reviewed transactions and related documents but no comprehensive audit on the disclosures and questions raised by Selangor BN and MCA.

“More importantly, the auditors admitted this. As the opposition in Selangor, we are still not satisfied with the brief explanation by the menteri besar.” 

“In fact, his threat of legal action if this matter continued to be pursued showed that the state government was still trying to hide certain things.”

“At the same time, if it is true that the auditors have done their job, why hasn’t the menteri besar produced the audit report? He must produce the white paper on Talam as promised,” Mohd Zin said at a press conference.

Mohd Zin questioned the state government’s acceptance of six lots totalling 535ha of land in Bukit Beruntung 2 for RM345 million from Talam, whereas the valuation of the land was RM113 million

He also question the purchase of 161ha of hill slope, Class 3 and Class 4 land, in Ulu Yam for RM18 million, even though the land was valued at RM12.7 million.

“Henceforth, we would like KPMG to explain to the Selangor people within seven days which aspects of the two above mentioned examples had been considered smart and prudent acquisitions made by the MB.”

Zin said it was puzzling that Khalid insisted that the deals involving Talam was not a bailout but a “debt rehabilitation” when it was revealed that the state government, through its subsidiaries, had spent a huge sum of money to buy Talam’s assets.

“What does debt rehabilitation mean? Isn’t the purchase of Talam’s assets not a bailout?”

He said in light of the latest development, the menteri besar should accept BN’s suggestion to have an independent committee conduct an investigation as there were still many unanswered questions.

He pointed out that in the frequently asked questions (FAQ) prepared by the state government, there was no mention of the “underwater” land bought from Talam in Bestari Jaya and Danau Putra, which was said to be over valued.

“In the latest disclosure by MCA, the state government has also allegedly bought land in Bukit Beruntung 2 and Ulu Yam for more than what they were valued. Can the auditor confirm that this transaction is clean and above board?

“Until a full report is out, we will continue making exposes so that the people will not be fooled by the menteri besar and state government’s ‘magic tricks’ through their explanation,” he said.

But Khalid said that at no time was the state “shortchanged” as provisions were put in place to ensure that Talam would make up the difference if the land did not match the value of the debt.

Chua Tee Yong said through Twitter: “Enron and a lot (other) cases show that (an) audit and its results are limited to the documents available”.

Enron was an American energy giant at the heart of a scandal that led to the dissolution of major audit firm Arthur Andersen for failing to uncover billions of debts and failed projects hidden by executives through accounting loopholes.

“That is why he has appointed four generals’ to help him fend off the issues,” said Chua Tee Yong.

“But people are curious why Khalid did not pick any of his executive councillors to defend him over the Talamgate controversy,” he added.

Chua was responding to the Selangor Government’s move to appoint Petaling Jaya Utara MP Tony Pua, Kuala Selangor MP Dzulkefly Ahmad, Selayang MP William Leong, and Khalid’s political secretary Faekah Husin as spokesmen on the debt recovery exercise.

The four had challenged Chua to a debate in Labis this weekend.

However, the Labis MP said he did not want to waste time debating with those not privy to details of the transactions.

“My invitation to debate with the mentri besar is still open. He is the best person to answer the questions raised,” he said.

Related news:

‘Audit not comprehensive’ – General – New Straits Times http://www.nst.com.my/nation/general/audit-not-comprehensive-1.139054#ixzz25kyYVYms

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21 thoughts on “Can the “not comprehensive” audit save Selangor MB from Talam scandal?

  1. Once again, Selangor PR is trying to cheat its People with misleading information. Without the exposure from BN, I will have thought the scandal had been probed and investigated. Now, it is revealed that only a review of documents given by the state government was conducted.

    Selangor PR, you are a big liar.

  2. AS THEIR AUDITOR THEMSELVES HAS QUALIFIED, “THEY ONLY REVIEWED DOCUEMENTS PROVIDED” SHOWS THAT THE AUDITORS ARE DISTANCING THEMSELVES FROM ACTUAL “AUDIT” OF THE DEAL.

    • Khalid treats us like fools. Everyone sees he is so scared to be asked about Talam scandal. If Talam has no panky hanky things, why Khalid dares not debate with Chua.

      • You can’t complain because he has good corporate background! Just like us, the x generation, who has good paper qualification we talk louder!

  3. I am an audit manager. It is not true that KPMG has performed any audit!!! This is the biggest lie saying KPMG has performed an audit on Talam case.

    • KPMG is misleading the public. They must apologise and explain to the public that they are not audit unit but advisory unit which has nothing to do with audit.

  4. KPMG is being played like a fiddle by selangor state government and used as a tool. If KPMG has any moral backbone, they should explain exactly what they have reviewed and if KPMG actually did a FULL AUDIT on the deal.

    KPMG TRIED TO DISTANCES THEMSELVES BY SAYING ” THEY ONLY REVIEWED FROM DOCUEMENT RECEIVED”

    • I personally think KPMG should apologise to the public too for the confusing statement and misleading opinion. It is an absolutely irreponsible statement.

  5. I dont understand your arguments here. KPMG is international big 5 audit firms. Is the deputy minister think he is more qualified? Don’t just bark, give evidence of shortcomings in the audit if he can.

    • Audit firm has many departments. Can the IT department in the audit firm to perform audit, answer is NO, can the advisory department perform audit, the answer is NO.

    • We urge Selangor government to show us the audit report and we will tell you the shortcomings. Where are the audit report and the white paper?

      • I also puzzled… no white paper… but audit report can be completed. What happened to the white paper, why it cannot be completed? I think the audit must be very brief so that it can be completed so fast.

    • Ms yap,
      I think you are being fooled like the rest of Malaysian by the so call “audit”. The report was qualified that it ONLY reviewed on docuements received from the state government and nothing else. They, the auditors, weren’t auditing the deal, which means they DID NOT check on the prices of market, and the actual transaction done. They even HAVE to verify the prices by going to the vendor for conformation and checking on the physical land IN AN ACTUAL AUDIT.

      I DON’T THINK THE KPMG HAS DONE ANY OF THIS AT ALL.

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