KUALA LUMPUR: Oil services and engineering company Serba Dinamik Holdings Bhd is taking legal action against its external auditor KPMG PLT for alleged negligence, breach of contract and breach of statutory duty.
Serba Dinamik came into the spotlight late last month when KPMG sounded alarm bells on some of the company’s past sales transactions and trade receivables.
Since then, Serba Dinamik chairman Datuk Mohamed Ilyas Pakeer Mohamed said the company has had to endure a lot of adverse market speculation that had resulted in, among other things, a significant drop in its share price and overall market capitalisation.
“In the past few weeks, you have seen a lot of stories about Serba Dinamik and most of it is speculation and not really addressing the truth.
“KPMG has negligently red flagged some trivial issues that don’t even affect the turnover of the company and for whatever reason, have blown the issue out of proportion,” he said during a statement yesterday.
Ilyas said the negative news had resulted in the company’s share price taking a beating and wiping out more than RM3bil from Serba Dinamik’s market capitalisation.
“These are not small numbers for an oil and gas firm. As such, we have decided that whatever red flags have been raised by KPMG, should be taken up against legally. We are taking legal action not because the company is not doing well. We are doing very well. We have RM18bil worth of ongoing contracts, turnover of RM6bil and profit in excess of RM1bil. But the external auditors have portrayed the company as if a lot of inappropriate things have been happening,” he said.
Serba Dinamik’s legal counsel Tan Sri Muhammad Shafee Abdullah said the company had filed the action yesterday morning.
“After consulting with the board, we have decided that a suit against KPMG is the most viable and justified option in view of the circumstances of the case. herefore, we have served a copy of the writ and statement of claim on KPMG.”
Shafee said he is expecting “favourable results” from the outcome of the lawsuit, adding that the damages that Serba Dinamik will be seeking against KPMG “won’t be small.”
“We cannot provide a figure but it (the damages) will be Astronomical. We are also seeking punitive damages, which is essentially damages that are punishing to KPMG.”
Serba Dinamik alleged that KPMG, in the course of their audit, had raised issues in obtaining various confirmations from Serba Dinamik’s customers and vendors on various payables and receivables, including establishing the existence of the said customers and suppliers.“These matters were raised in a special board of directors meeting on May 3, 2021, where KPMG indicated that they were not willing to complete the audit until and unless a third party independent review is conducted on the alleged findings raised by KPMG.
“Serba Dinamik contends that the findings raised by KPMG were not substantive in nature that warrants an independent review and that the issues faced by KPMG are entirely attributable to their own negligence, among other breaches, in the course of the audit process which forms the subject matter of the civil suit based on the grounds cited above.”
Earlier this month, Serba Dinamik announced it had appointed Ernst & Young Advisory Services Sdn Bhd as its independent reviewer to assess the veracity and accuracy of the matters highlighted by KPMG.
In another situation involving a middle eastern foreign vendor, Serba Dinamik said KPMG had performed a site visit to verify the existence of their office and concluded that the office did not exist.“Upon immediate examination of KPMG’s concerns, Serba Dinamik immediately informed KPMG that the reason they did not find the office was because the address concerned had a mix of numerical digits and Arabic letters that the auditor misread and ultimately went to the wrong address. Proof of the correct address and office was provided by Serba Dinamik but KPMG had refused to verify the same,” the company alleged.
Separately, group chief executive officer Datuk Mohd Abdul Karim Abdullah reiterated that there was no element of related-party transaction in the undertaking of Block 7 Investments LLC, when its Abu Dhabi project win was first announced in April last year.
“This was a genuine, big project that was won based on the proposal that we put in against a lot of other competitors and all the legalities in terms of agreements and documentations are all available to support this.”
Abdul Karim also played down concerns by analysts that Serba Dinamik might have difficulties securing funding for the Abu Dhabi project.“We have a lot of alternative plans on how to resolve the financial aspects on how to support this project.
“We have received tremendous interest and support from investors. Why? Because they believe in our vision, capabilities and track record,” he said.Join our Telegram channel to get our Evening Alerts and breaking news highlights
Source: The Star
