Say No To Hudud

Monday, January 31, 2011

Will the PwC Malaysia partnership break up in the Year of the Rabbit?

From the streets of Cairo to the corridors of Level 10, 1Sentral, this is Chin Kwai Fatt, the MD of PwC Malaysia's,  Hosni Mubarak moment!

When the Kanebo accounting fraud was revealed in 2005, "PricewaterhouseCoopers International moved swiftlyThe same month, while it said that it will help Chuo Aoyama to correct standards and practices, PwC granted its affiliation to a new firm called Aarata. Many of the Chuo Ayoama accountants and partners moved to the new firm. "This new member firm will operate under a new management and governance structure, and will be of a sufficiently large scale to serve its clients," PwC had said at that time.

Less than four months later, in September that year, Chuo Ayoama restarted operations with a new name: Misuzu. But, by then, the damage had been done and the two firms—Aarata and Misuzu—together had 30 per cent less clients than what Chuo Ayoama had before the scandal broke."
By early 2007, Misuzu was shut down, after another scandal surfaced, "The suspension led to chaos among the firm's audit clients, which included Sony and Toyota.

PwC's global bosses made it their priority to tend to the needs of Japanese multinational clients and foreign blue chips with subsidiaries in Japan. 
Mr DiPiazza said Aarata's limited size reflected the availability of staff who met PwC's performance standards.

"We would have hoped the Japanese profession evolved to a higher level of quality over the years," he said. "It did not." 
He said cultural differences could not be used as an excuse for lower quality."

There is real concern that the New York bosses of PwC might decide to pull out of Malaysia. The Senior Partners in Malaysia are very upset with the allegations that remain unanswered, and the chatter is that many of the firm's Senior Partners are now avoiding Chin Kwai Fatt like the plague.
Chin Kwai Fatt unveiling the new logo of PwC, with less fanfare than one would expect.
Chin Kwai Fatt does not want to answer the questions raised by the Partners, and they are understandably upset at this. Already there is word that at least six (6) of the Senior Partners in PwC Malaysia are planning to leave the firm in the months to come.
Chin Kwai fatt was born in September of the Year of the Sheep, 1955, and some say that the Year of the Rabbit can prove to be a very challenging one for those born in 1955.
Staff morale is falling, and none can blame the staff for feeling low when no one is prepared to come out 'guns blazing' to shoot down and answer the allegations of fraud and corrupt practices raised here.
How many times has Chin asked the girls to give some meaningless answer or other when they answered his calls? Probably not what they thought they will be doing when they joined PwC in the first place.
The uncomfortable silence that envelopes the atmosphere there can become too much for some to bear, and even if the bosses in New York decide to do nothing at all, the risk that PwC Malaysia might break up in the weeks and months to come is not something that is as improbable as it would have seemed just a few months ago.
We have to ask Mr Boorman this question. Mr Boorman, will you allow your children to work for PwC Malaysia when they grow up, if the Global Leaders let things remain as they are now?

Mr Boorman, what would you say to someone who wants to join PwC Malaysia today?

Thursday, January 27, 2011

Part 2: Does PwC's Paul Boorman condone corrupt and fraud practices outside of US and Europe? If the answer is no, then why so silent.......

Chin Kwai Fatt at the launch of the New Logo for PwC. But what does a new logo matter when allegations of fraud and corrupt practices are left unanswered? 
Mr Boorman,

The PwC Global Code of Conduct is being raped in this country, how much longer will you remain silent?

In Part 1 we said this,

"We all know the regulators in the US and European Union brook no nonsense. But how is that the Global Leaders stood by and allowed a Director in PricewaterhouseCoopers in Malaysia to leave the firm and immediately head up the Auditor Oversight Body in Malaysia, when this will show that the independence of the system has been violated under Rule 4012 of the PCAOB, a regulator under whom PwC in Malaysia was already registered, along with many other PwC offices worldwide?"

allow us to add to the argument.

On the 1st of April in 2010, Malaysia saw the launch of its very own Audit Oversight Board, the AOB. Similar in intent and purpose as the PCAOB of the United States of America, the AOB should have been fantastic news for those that wished for an improvement in Corporate Governance and Auditor Oversight in this country, but sadly the events that transpired immediately after the launch painted a bleak picture.

On its first day of operations, the AOB saw the appointment of it's board, including the appointment of its Executive Chairman, as well as the release of the handbook detailing how an auditor may apply to be registered under the Board.

In the AOB's own words, the process of registration, including the necessary checks with other regulatory bodies, to ensure that each auditor registered met the 'fit and proper' criteria will take about two weeks. 

But this did not happen in the case of your firm here, PricewaterhouseCoopers Malaysia. In fact your firm was registered in the very first day of operations of the AOB, and we have to ask you, how many millions of Ringgit had to change hands in order for this to be accomplished? 

With revenues that run above RM 500 million annually, PwC in Malaysia, while a minnow in terms of contribution to the global revenue of PwC of RM 82.2 Billion, is no 'small fish' within the shores of this country. 

There is another matter that makes the registration of PwC Malaysia on the 1st of April, 2010,  a legal impossibility, Mr Boorman, you see, the law to collect the fees for registration was only enacted on the 15th of April of 2010.

In fact, if you peruse the documents above, Mr Boorman, you will see that the Minister concerned only signed and approved the law on the 13th of April, 2010.

We ask you once again Mr Boorman, if this had happened in the United States of America or the European Union, can the Global Leaders of PwC such as yourself remain silent for any period of time?

You also have to ask yourself Mr Boorman, what had pushed the Senior Partners of PricewaterhouseCoopers in Malaysia to circumvent the normal and legal registration process under the rules of the AOB, and get the firm registered in this way, without even respecting the authority of a full Cabinet Minister in the process? 

They even got one of their own Directors to become the Director of the AOB for goodness sake, and still, all we get from you is silence?!?!

Mr Paul Boorman, Global Leader - Operations for PwC.

En Nik Mohd Hasyudeen Yusof and Mr V.U. Kumar, please answer these questions.

Chin Kwai Fatt at the launch of the New Logo for PwC. But what does a new logo matter when allegations of fraud and corrupt practices are left unanswered?
Following the worst financial crisis in generations, the US Congress formed the Financial Crisis Inquiry Commission (FCIC) in May of 2009. The FCIC has just released its findings here, and says that the crisis was avoidable.

"We conclude this financial crisis was avoidable," the report said.

It said regulators failed to adequately police financial markets, that financial firms had poor risk management and corporate governance practices, and that government was ill-prepared to handle the fallout from excessive borrowing when loans soured.

"The crisis was the result of human action and inaction, not Mother Nature or computer models gone haywire," the draft report reads. "The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand, and manage evolving risks within a system essential to the well-being of the American public." (emphasis added)

En Nik Hasyudeen, 

You are the Executive Chairman of the Audit Oversight Board, empowered by the Securities Commission to ensure that each and every auditor of a Public Interest Entity, be it an individual or a firm, meets the 'fit and proper' criteria as set by the AOB guidelines.

  En. Nik Mohd Hasyudeen Yusoff, Executive Chairman of the Audit Oversight Board
Prior to this appointment, you were the President of the Malaysian Institute of Accountants, in 2008/9. While you held the post of President of the MIA, you knew that the engagement partner of the firm Roger Yue, Tan & Associates was charged by the SC, for abetting a public listed company in submitting false information to the Bursa.

When PricewaterhouseCoopers was registered by the AOB, on the 1st of April 2010, on its first day of operations, and your first day on the job, you would have known that this same firm of Roger Yue, Tan & Associates was the Auditor for PricewaterhouseCoopers Consulting Sdn Bhd (464379-U).

How did you allow the registration of PricewaterhouseCoopers within a few hours of taking your seat, when an investigation into why and how PricewaterhouseCoopers has retained Roger Yue, Tan & Associates as the auditors for their consulting company must be done under Section 31P SCA, 'fit and proper' criteria for practices?

Who approved the registration of PricewaterhouseCoopers on the 1st of April, was it you En Nik Hasyudeen or was it Mr Manohar Benjamin Johnson, the Ex PwC Director who joined the AOB as your number 2 the very same day?

We know that Mr Chin Kwai Fatt, the MD of PricewaterhouseCoopers is a personal friend of yours En Nik Hasyudeen, but we do not believe that that would have influenced the speed with which his firms registration was approved by the AOB, correct?

Mr V.U. Kumar,

Mr V.U. Kumar, MIA Investigation Committee
Have you taken the time to investigate the allegations raised here, here, here and elsewhere as to the practices of the firm of PricewaterhouseCoopers and your fellow Senior Partners?

Wednesday, January 26, 2011

Does PwC's Paul Boorman condone corrupt and fraud practices outside of US and Europe? If the answer is no, then why so silent.......

Mr Paul Boorman,

It is just a matter of time before major multinationals here will see themselves challenged in the courts of the land, by their shareholders, on why they continue to use the services of PricewaterhouseCoopers as their auditors. PricewaterhouseCoopers's clients will see themselves taken to task for retaining your firm as Auditors in Asia, London and New York. Is this not worrying to the Global Leaders of PwC such as yourself?

Mr Paul Boorman, Malaysia is not the US or Europe, but in a globalised world,  the repercussions from your silence, and that of PricewaterhouseCoopers in general, can be just as damaging.

Chin Kwai Fatt at the launch of the New Logo for PwC. But what does a new logo matter when allegations of fraud and corrupt practices are left unanswered? 
Even the Malaysian mainstream media, which has been just as quiet as you have are, has broken it's silence on the questions raised here.

Saturday January 22, 2011, The Star, Malaysia.

When blogs and big business collide

REMEMBER a blog called Sime Darby Watch (SDW)? It has been completely wiped out when the mysterious blogger he never revealed his identity on the blog abruptly called it quits in April 2009. It's therefore hard to pinpoint when it was created, but early 2008 seems to be a safe bet.

One news report puts it as March 2008. That was not long after the completion of the mega-merger that saw Sime Darby Bhd, Kumpulan Guthrie Bhd and Golden Hope Plantations Bhd becoming a single entity we now know as Sime Darby Bhd.

It was apparent that the blogger had not come from the old Sime Darby. In fact, he explained that the blog was “for employees of the now-defunct Kumpulan Guthrie and Golden Hope to voice their views and concerns”. The blogger clearly had access to a lot that was going on at the new Sime Darby and was decidedly critical of its management, which was dominated by executives from the old Sime Darby. He often brought to light major developments and issues at the company that had not been publicly available.

SDW was easily the most well-known among the blogs that targeted local businesses. Sime Darby was (and still is) one of Malaysia's biggest companies, and the merger had enlarged it further although not everyone thought the exercise was a good idea. And as a government-linked company, there was (and still is) a political dimension to many of its actions and decisions. These factors guaranteed a ready audience for dirt on Sime Darby.

The blogger's ability to consistently expose alleged wrongdoings and his writing skills in lambasting his target, also helped SDW garner a significant following.

No other anti-corporation blogs have so far come close to SDW's influence. Most have been short-lived, seldom lasting beyond a handful of entries after the bloggers had run out of things to say or have simply exhausted their motivation to blog.

However, another blog has recently surfaced, promising to go on “for months to come to weed out corporate misconducts (sic) as a service to the taxpayers and Malaysians in general”. The blog's title, zarinahtakesapaycut, is a swipe at Securities Commission chairman Tan Sri Zarinah Anwar, but the principal target is actually professional services firm PricewaterhouseCoopers (PwC).

The anonymous blogger has been prolific so far. The blog kicked off on Dec 1 last year with four postings. Until yesterday, there have been 34 more. That's an average of one posting every 36 hours! He has also been persistent (and somewhat pesky), compiling an email list to ensure that all those on the list including this columnist and some colleagues are notified whenever the blog has a new entry.

The blogger definitely knows a thing or two about grabbing attention. The headlines for the blog entries are usually cleverly crafted and compelling. The blogger has been creative and resourceful in generating angles and themes that suggest that the blog is constantly introducing fresh information and highlighting new players and developments. For example, a Dec 31 entry cited a May 2009 article by this columnist to back up the blog's claims about PwC.

The truth is, zarinahtakesapaycut is a relentless attempt to discredit PwC by harping on the same few issues. The bias is obvious. Only the hopelessly clueless will think that the blogger is being objective. Even so, we can't dismiss the blog with the wave of a hand, partly because the blogger is insistent in bombarding readers with details.

This is not the place to dwell on how much of the blog is factual. The point here is that the blogosphere has become part albeit a small one for now of the corporate landscape. However, we have yet to properly understand how we treat the information we get from the blogs. The idea of regulating blogs is an incendiary matter and we may not even have to go there but there ought to be more discussion and engagement within the business community about this subject.

How can we not be ambivalent about these anonymous bloggers who attack listed companies, Big Four firms and business regulators? On one hand, we are thrilled by the pugnacious muckraking and the whiff of scandal, and we cheer the notion of the lone guy, armed with a PC and Internet connection, going up against the deep-pocketed, soulless corporation? Yet, can we really afford to ignore the questions about the bloggers' motives and integrity, and the veracity of the information they put up in cyberspace?

bloggers are indeed accurate and have revealed stuff that the companies had intended to hide, our scepticism may well work against us. And what if the bloggers are way off the mark, or worse, are deliberately spreading lies? In such cases, sometimes, no amount of salt can undo the damage suffered by the targets. And when the businesses suffer, their stakeholders (such as the minority shareholders) feel the pain as well.

Yes, legal action is an option, and yes, the mainstream media isn't perfect either. We know this, but what we need to learn next is how to effectively deal with irresponsible blogging. In business, as in politics, one of the worst things that can happen to us is when our ability to choose what to believe in, is weakened by bad information.

● Deputy executive editor Errol Oh doesn't have a blog.

So tell us Mr Boorman, and tell the world that this blog is way of its mark.

Tell the world that PwC takes allegations of corrupt and fraud practices seriously regardless of which part of the globe they arise from.

Tell the world that the question of how much revenue that particular region or nation contributes to the coffers of PwC will in no way influence the speed and seriousness of the action that PricewaterhouseCoopers takes to safeguard it's brand name, its reputation and its credibility.

Tell us it is so.

How can PwC not even issue a simple statement when its Global Code of Conduct has practically been raped?

We all know the regulators in the US and European Union brook no nonsense. But how is that the Global Leaders stood by and allowed a Director in PricewaterhouseCoopers in Malaysia to leave the firm and immediately head up the Auditor Oversight Body in Malaysia, when this will show that the independence of the system has been violated under Rule 4012 of the PCAOB, a regulator under whom PwC in Malaysia was already registered, along with many other PwC offices worldwide?

Will the regulators in the US and Europe have allowed the appointment of Sham Directors, or the perpetration of fraud shown here, when one company was renamed as another for sale, allowing the real object of the sale to remain hidden to defraud its creditors?

Will you be able to remain silent for so long if this had happened in the US or Europe, Mr Boorman?

Could PricewaterhouseCoopers get away with using the services of a 'tainted auditor' in the US or Europe, as your firm has done in Malaysia?

These allegations will continue to haunt your organisation globally, in the weeks and months to come, until you come out with a statement in reply, and show that PwC takes the sanctity of its own Global Code of Conduct and reputation, seriously.

PwC Code of Conduct

Our responsibilities

The PwC Code of conduct defines how we should behave and conduct business in a wide range of settings and situations. The Framework for Ethical Decision Making supplements the code and will help us resolve issues.

It is the responsibility of each of us to follow the Code of conduct and PwC policies consistently and appropriately and help others to do so. When non-compliance with our Code of conduct is reported or otherwise suspected, steps will be taken to investigate and, if appropriate, remedy the situation.

We are encouraged to report and express our concerns and must do so fairly, honestly and respectfully. PwC is committed to protecting individuals against retaliation. People in the reporting line are responsible for addressing issues that are brought to their attention.

Those who violate the code or PwC policies and procedures will be subject to disciplinary action, up to and including dismissal. Disciplinary measures will also apply to anyone who directs or approves infractions or has knowledge of them and does not promptly move to correct them.

Monday, January 24, 2011

Interlok, Perkasa and Chin Kwai Fatt: Three of the major challenges for BN before GE 13

Dear Barisan Nasional Leaders,

Dato' Seri Najib Tun Razak
Datuk Seri Dr Chua Soi Lek
Dato' G. Palanivel
Voting is sometimes an emotional decision, not just the act of voting itself, but the choice the voter makes is influenced by events or people that the voter feels strongly about.

PERKASA is not doing anyone any favours, and the fact that PERKASA can say what it wishes without fear of sanction, will drive some voters away from BN come GE 13.

Interlok is perceived to whack the already 'marginalised' Indians, and we actually feel sorry for the poor Indians because the Education Ministry seems to be able get away with any decision it makes without regard to who feels 'whacked' in the process.

Chin Kwai Fatt, and the fact that till now he seems to be above the law, and that no one can make him answer the allegations against him and his firm is going to help alienate a different group of voters.

While the issue with Chin Kwai Fatt is nowhere near as well publicised as the other two, it upsets voters who are more concerned with the investment climate in the country, who wonder about the veracity of the audits done by PwC in Malaysia, who 'dabble' in the markets, who would prefer to have some real standards of Corporate Governance and not regulatory bodies that are a mere shell of what they are supposed to be, who wonder how much credibility acronyms like ETP have, when there is no response from the ruling Government on one of the most serious regulatory scandals in recent memory; the sort of voters who also reach in to their pockets when things are not as they would like to be.

Is Mr Chin Kwai Fatt above the law in this country?

'Little things add up', that is a fact of life. And if the leaders of Barisan Nasional choose to ignore what they perceive as 'little things', do not expect that every voter out there will also think the same way. For some, the 'little things' are not 'little', but massive, and vitally important.

Just the number of GLC's that are audited by PricewaterhouseCoopers Malaysia should have raised alarm bells in the Corridors of Power with all the allegations against them, but the question is, have the allegations raised any alarms? When PricewaterhouseCoopers was appointed to review Sime Darby's reporting structure, as external auditors, alarm bells did 'ring' after the findings were released.

What possible reason can there be for the Barisan Nasional Government to allow questions to remain unanswered regarding the sanctity of the Regulators and the soundness of the Corporate Governance framework in this country? It does not do anyone any favours, and can potentially leverage itself into an even more damaging state if there is another major accounting fraud involving a GLC or listed company, even if does not involve PricewaterhouseCoopers.

Some problems will go away with time, and some problems spread like infections that end up corrupting everything they come into contact with, and there is no way a problem involving the Regulators and a Big Four Audit firm can be considered as a problem that will go away with time.

It will keep coming back, getting more virulent with each wave, until the voters will have no choice but to punish those that chose to do and say nothing, when they should have been doing everything possible to cure the system of the disease(s).

Sunday, January 23, 2011

Will Errol Oh be the catalyst for press freedom in Malaysia?

This blog is named zarinahtakesapaycut for a reason. Our very first post here is Tan Sri Zarinah Anwar must take a RM 100 paycut, and it still remains as one of the most read posts to date.

We saw a necessity to have this blog, because we could see what is happening in the area of Corporate Governance very clearly, and yet we were also alarmed with the total lack of debate in the mainstream media about some of the questions we have raised here.

Please do not miss the point of the raison d'etre for this blog, which is to question first and foremost the Chairman of the Securities Commission, Tan Sri Zarinah Anwar, on why she allowed the registration of a Big Four firm, namely PricewaterhouseCoopers, under the nascent Audit Oversight Board, on the 1st of April, 2010, even though that registration is both a physical and a legal impossibility, and is an affront to the principles and logic of having an Oversight Board for Auditors in the first place.

Has the mainstream media questioned Tan Sri Zarinah on the scandalous registration of PricewaterhouseCoopers by the the AOB under her watch?
The reader can view the latest Register of Auditors here, and see that nothing has changed despite the questions raised.
To summarise the chronology of the registration of PwC by the AOB; the AOB, and its Board Members who were themselves only appointed on the 1st of April, 2010, also managed to do all the checks with the relevant regulatory bodies, something the AOB itself says will take up to two weeks,  as well as collect the fees for the registration, which was only signed as law fifteen days later, on their very first day of operations when the Firm to be registered was PricewaterhouseCoopers in Malaysia!

This Regulation was to come into effect on the 15th of April 2010, so how is it possible for the AOB to register a Big Four firm which does the audits for a hundred Bursa listed Companies a full two weeks prior to that?
In light of the above, should we not expect that the mainstream media will have by now asked the same questions that we ask here?

Does it not seem reasonable to have this blog asking the questions,  when no one has questioned what transpired at the dinner in Tan Sri Zarinah's home, when the MD of PricewaterhouseCoopers, Mr Chin Kwai Fatt dined there along with the future Director of the AOB, Mr Manohar Benjamin Johnson, who was an Executive Director at PricewaterhouseCoopers at that time?

Does it not seem reasonable to have this blog asking the questions, when we see that the Executive Chairman of PricewaterhouseCoopers, Dato' Johan Raslan, who is also a member of the Securities Commission of Malaysia's Corporate Governance Consultative Committee,  is not asked a thing when the rules are bent past the breaking point to get his firm, PricewaterhouseCoopers registered by the only Oversight Body in this country that can scrutinize it with a fine tooth comb?

How can Tan Sri Zarinah Anwar get away with something as indefensible like this? How can PricewaterhouseCoopers  get away with even more that that?

If this was to happen in Singapore, Hong Kong, Japan or Australia, Tan Sri Zarinah would have resigned by now. The fact is that the Press cannot report on the AOB or question the actions of the Chairman of the SC in Malaysia, that is the true measure of the Press Freedom that we have allowed ourselves.

Why does no one write about the ongoing fraud perpetrated by PwC in Malaysia? Why hasn't PricewaterhouseCoopers in Malaysia denied the fraud?

Perhaps Mr Errol Oh can try calling this number +60 (3) 2173 1188, which will take one to the office of PricewaterhouseCoopers in Malaysia, and ask either Chin Kwai Fatt or Johan Raslan to deny or reply to any of the allegations here, and tell us what he gets?

Will the press call Chin Kwai Fatt and Johan Raslan?

As far as we are concerned, we are asking the questions which the mainstream media does not ask of the SC and the AOB; and asking PricewaterhouseCoopers to answer the questions which the AOB in return, does not ask of them.

And now we ask the press to regain some measure of Press Freedom on behalf of themselves, the people and the nation and make this blog totally redundant.

Friday, January 21, 2011

MICPA in an embarrassing situation with Johan Raslan as it's President

The Malaysian Institute of Certified Public Accountants, MICPA, has a vision to be the premier business qualification in Malaysia, comparable to the best in the world. 

The MICPA has listed one if it's missions as, "to promote high standards of professional conduct and technical competence of members to safeguard public interest."

There is a 'small' challenge that the MICPA has to overcome in order to be seen as true to it's mission statement above. Dato' Johan Raslan, the Executive Chairman of PricewaterhouseCoopers in Malaysia, who has been questioned countless times here, is the current President for the MICPA.

Dato' Johan Raslan, the President of MICPA, a body that wishes to promote high standards of professional conduct ??
The principal objects of MICPA include:

  • To preserve at all times the professional independence of accountants in whatever capacities they may be serving.
  • To maintain high standards of practice and professional conduct by all its members.

How does the MICPA explain to its members, when it's President, Johan Raslan, maintains a continuous state of silence despite repeated calls to answer the allegations of fraud against him and his company, PricewaterhouseCoopers Malaysia?

How does the MICPA explain to its members, when it's President, Johan Raslan, uses the services of a 'tainted auditor', one that is not in the list of CPA firms under the MICPA,  to audit the books of a company called PricewaterhouseCoopers Consulting Sdn Bhd (464379-U), in which the President, Johan Raslan, is not only a Director, but the majority shareholder as well?

How does the MICPA explain to its members, how it's President, Johan Raslan, who plays a very important role in the ongoing fraud perpetrated by him and other Senior Partners of PricewaterhouseCoopers Malaysia, is allowed to remain as President without any questions being asked of him by the MICPA itself?

How does the MICPA explain to its members, and to the students who are in it's programs, and to the members of the public, why it has as a President, one Johan Raslan, who does not even adhere to his own firms code of conduct, and in fact is in blatant violation of the same, a code grandly called the  PricewaterhouseCoopers Global Code of Conduct, available for view here?

How will the MICPA address the challenge, when it's President, Johan Raslan, does not even have the gumption to reply or deny to an open challenge as plain as this one?

Should not the MICPA have a President who maintains the highest standards of practice and professional conduct, or does the MICPA have totally different yardstick to measure what constitutes the highest standards of professional conduct, and finds absolutely nothing wrong with a President like Johan Raslan?

Thursday, January 20, 2011

Part 2: The PCAOB and PricewaterhouseCoopers Malaysia fraud allegations

Under the Sarbanes-Oxley Act, non-U.S. public accounting firms that audit or play a substantial role in the audit of U.S. issuers are subject to oversight by the PCAOB. Currently, over 900 non-U.S. audit firms from more than 85 countries have registered with the PCAOB. Under the Act and the Board's rules, non-U.S. registered firms are subject to PCAOB inspections in the same manner as U.S. firms. PricewaterhouseCoopers Malaysia is registered with the PCAOB Under the Sarbanes-Oxley Act, non-U.S. public accounting firms that audit or play a substantial role in the audit of U.S. issuers are subject to oversight by the PCAOB. Currently, over 900 non-U.S. audit firms from more than 85 countries have registered with the PCAOB. Under the Act and the Board's rules, non-U.S. registered firms are subject to PCAOB inspections in the same manner as U.S. firms. PricewaterhouseCoopers Malaysia is registered with the PCAOB.

We continue from Part 1, where we ended with the fact that PricewaterhouseCoopers LLP and its Office of General Counsel were made aware of the fraud allegations against PwC Malaysia back in 2003, and that they did nothing about it.

PricewaterhouseCoopers Malaysia, together with all the other offices of PwC worldwide were supposed to allow IBM Corp to acquire their Consulting Business, as part of a global acquisition by IBM Corp of the Consulting and Technology arm of PwC.

According to the letter sent to the SEC in The United States as well the Article of Non Opposition issued by the EEC in Europe, there was no way for the Consulting arm of PricewaterhouseCoopers in Malaysia to remain exempt from the sale. And the consulting arm of PwC Malaysia was and still is PricewaterhouseCoopers Consulting Sdn Bhd (464379-U), which till today remains under the ownership and control of the MD of PwC Malaysia, Chin Kwai Fatt; the Executive Chairman, Johan Raslan and other Senior Partners of PwC Malaysia. 

But what happened in Malaysia is an interesting sleight of hand, where a company called PricewaterhouseCoopers Consulting (East Asia) Sdn Bhd, was renamed as PwC Consulting Malaysia Sdn Bhd (289801-A) on 20-11-2001, to be sold off to IBM Corp as the 'legitimate' Consulting arm of PwC in Malaysia.

This was done to defraud the creditors of PricewaterhouseCoopers Consulting Sdn Bhd (464379-U), as there was no way to allow IBM Corp to acquire this company without disclosing the hundreds of millions of Ringgit worth of contingent liabilities PricewaterhouseCoopers Consulting Sdn Bhd (464379-U) was hiding.

Chin Kwai Fatt and Johan Raslan, together with their co-conspirators also use a tainted Auditor to audit the books of PricewaterhouseCoopers Consulting Sdn Bhd (464379-U), to keep the contingent liabilities out of sight.

Chin Kwai Fatt and Johan Raslan, of PricewaterhouseCoopers Malaysia, who remain silent to this day. Neither denying nor answering the many allegations made against them.

Not only that, this same tainted auditor was also the liquidator for the renamed PwC Consulting Malaysia Sdn Bhd (289801-A), when it was disposed off to IBM Corp.

To add insult to injury, Chin Kwai Fatt and Co, also masterminded the appointment of 'Sham Directors' into PwC Consulting Malaysia Sdn Bhd (298801-A), the appointment of persons who have never been a part of the PwC Consulting business in Malaysia, to facilitate the sale to IBM Corp.

Mr Paul Boorman, the Global Leader for Operations in PwC, who has not answered on the behalf of Chin and Co.

PricewaterhouseCoopers LLP, and the other global offices' have yet to answer how they can allow the continued audits of IBM in Malaysia and IBM worldwide, when technically the acquisition by IBM Corp of PwC's Consulting Arm in 2002 is still not complete.

The silence of PwC despite the fraud allegations against Chin Kwai Fatt, Johan Raslan and PricewaterhouseCoopers in Malaysia, and the fact that PricewaterhouseCoopers has not kept to the terms they themselves made to the SEC and the EEC amongst others, makes one wonder what what else needs to be said before they will break their silence.

Wednesday, January 19, 2011

The PCAOB and PricewaterhouseCoopers Malaysia fraud allegations

Under the Sarbanes-Oxley Act, non-U.S. public accounting firms that audit or play a substantial role in the audit of U.S. issuers are subject to oversight by the PCAOB. Currently, over 900 non-U.S. audit firms from more than 85 countries have registered with the PCAOB. Under the Act and the Board's rules, non-U.S. registered firms are subject to PCAOB inspections in the same manner as U.S. firms. PricewaterhouseCoopers Malaysia is registered with the PCAOB 

The PCAOB has conducted inspections of one or more registered firms located in Malaysia in the past. "The Board began talking about these issues with its non-U.S. counterparts not long after its establishment, and adopted a cooperative framework that allows the PCAOB to rely, to a degree deemed appropriate by the Board, on inspection or enforcement work performed by a home-country regulator."

Now in Malaysia, the role of the home-country regulator is played by the Audit Oversight Board

"We know there was a dinner at the home of the Chairman of the SC in Taman Bukit Pantai, KL, where the guests were the MD of PwC, Mr Chin Kwai Fatt and an Executive Director of the same firm, a Mr Manohar Benjamin Johnson.

We know that the same Mr Manohar Benjamin Johnson was later appointed as the "number 2" in the Audit Oversight Board, as the Director.

We have here a curious case, in which a Director from the largest Audit Firm in the country was appointed to basically run the oversight body which is responsible for overseeing all Auditors of Public Interest Entities, including the firm that had employed him prior to the appointment, in that they fulfill the 'fit' and 'proper' criteria,  and also to protect the interests of investors by promoting confidence in the quality and reliability of audited financial statements of PIEs."

Can the PCAOB rely on the inspections and the enforcement work conducted by the AOB, in any future inspections it may conduct on any registered firms located in Malaysia?

Can the PCAOB accept the inspections and enforcement of the AOB , when Mr Chin Kwai Fatt, the MD of PricewaterhouseCoopers Malaysia had a hand in who was to run the AOB?
Subsequent to that, PricewaterhouseCoopers Malaysia was registered by the AOB, under circumstances which made the registration a legal and a physical impossibility.  

These are some of the questions that can be asked about the scandalous registration:

"Ladies and Gentlemen , your appointment was announced on the 1st of April 2010, effective immediately from that date, by the SC. (The Star, Friday April 2, 2010)

We now ask you a series of questions with regards to what transpired under your watch on the 1st of April 2010.

1. How was the firm of PricewaterhouseCoopers (PwC) and Mr Cho Choo Meng of that same firm, registered by the AOB on the 1st of April, under Section 31s (1) SCA,when the board members themselves were only appointed on that very same day?" 

Questions were then asked of the regulators, as well as the Global Leaders of PricewaterhouseCoopers as to the fraudulent acts of PricewaterhouseCoopers in Malaysia, with regards to the sale of the Global Consulting Business of PricewaterhouseCoopers to IBM Corp in 2002, as well as to the validity of the audits conducted by PricewaterhouseCoopers on IBM in Malaysia as well as globally.

Mr Paul Boorman, Global Leader for Operations in PwC has been asked many questions

As has Mr Coenraad Van Beek, Global Leader for ethics and Business Conduct in PwC.
Questions were also asked of PricewaterhouseCoopers LLP and it's office of General Counsel in New York, as to why they have remained silent on the continuing fraud by PricewaterhouseCoopers in Malaysia, though they were made aware of the fraud as far back as in 2003. 

We have seen a serial failure of both self regulation as well as external regulation to question and investigate allegations of unethical and fraudulent acts by the Country Managing Partner, the Executive Chairman as well as other Senior Partners of PricewaterhouseCoopers in Malaysia; despite the prevalence of charters like the PwC Code of Conduct and legislations that have no real impact on the behaviour of these goons.

to be continued

Monday, January 17, 2011

Will the silence on the PwC fraud allegations affect ongoing FTA negotiations for Malaysia?

Malaysia is now a part of the negotiations for the Trans-Pacific Partnership (TPP), involving eight other countries. Australia, Brunei, Chile, New Zealand, Peru, Singapore, the United States and Vietnam are the other parties in the negotiations. Malaysia is also negotiating with the EU on an Malaysia-EU FTA, as well as working on the stalled FTA talks with the United States.

When Peru was negotiating an FTA with the United States, one of the areas where there was a call for improvement was in Corporate Governance.

"One of the issues being discussed with great care and hard on companies in recent months is related to the “corporate governance”, a tool that not only should be on the business agenda, but also in public administration." - Urge to Develop Good Corporate Governance Practices

It has to be remembered that any FTA with the United States has to be approved by the United States Congress. The Malaysian Parliament itself has no role in the approval of an FTA.

In the Thailand- New Zealand Free Trade Agreement, the Preamble to the FTA carried this point:

Recognising the significance of good corporate governance and the need for a predictable, transparent and consistent business environment to enable businesses to conduct transactions freely, and use resources efficiently and take investment and planning decisions with certainty; 

It has been shown that both PricewaterhouseCoopers in Malaysia as well as the Audit Oversight Board under the Securities Commission will have some very serious questions to answer if the PCAOB of the United States ever decides to do an inspection of PricewaterhouseCoopers in Malaysia.

Can Malaysia be in the best position possible at the various negotiations if on top of the existing issues that are being hammered out, the country is also questioned on its standard of Corporate Governance?

How much damage must Chin Kwai Fatt and Johan Raslan cause before they are asked to break their silence?
PricewaterhouseCoopers in Malaysia is the auditor for more than a hundred Public Listed companies. Now, while they are allowed to remain silent by the regulators so far, we have to ask if the same privilege can be given them when our economy becomes more globalised in nature, which will be the case when we sign more and more FTA's.

Fraud allegations of this nature must be answered. Action must be taken regardless of whether we are planning on signing FTA's with countries that have better standards of Corporate Governance than us or not. We must recognise the fact that we cannot hope to be a real player in the global field, if we continue to believe that the world at large will be as accepting of lax standards as we are.

Can the PCAOB find evidence of fraud if it does an inspection of PricewaterhouseCoopers Malaysia?

PricewaterhouseCoopers Malaysia is a registered Public Accounting Firm with the Public Company Accounting Oversight Board (PCAOB) of the United States of America. The PCAOB does conduct inspections of foreign registered public accounting firms, and has conducted inspections of PricewaterhouseCoopers firms in Brazil, South Africa, Mexico and the United Kingdom, to name a few, in the past. 

Because of the scandalous nature of the registration of PricewaterhouseCoopers in Malaysia under the Malaysian Audit Oversight Board (AOB), to hope for a fair and impartial inspection of PricewaterhouseCoopers Malaysia is perhaps too much to ask of the AOB. 

Rule 4012, under Section 4 of the Rules of the Board, states the rules under which the PCAOB may conduct an inspection of PricewaterhouseCoopers Malaysia.

            A foreign registered public accounting firm that seeks to have the Board rely, to the extent deemed appropriate by the Board, on a non-U.S. inspection when the Board conducts an inspection of such firm pursuant to Rule 4000 shall submit a written statement signed by an authorized partner or officer of the firm to the Board certifying that the firm seeks such reliance for all Board inspections." 

To what extent can the PCAOB rely on the inspection, or lack off, of PricewaterhouseCoopers Malaysia by the Audit Oversight Board, when these questions on Corporate Governance remain unanswered?

How will the PCAOB decide on this question under Rule 4012:  (a) (1)    information concerning the level of the non-U.S. system's independence and rigor, including the adequacy and integrity of the system, the independence of the system's operation from the auditing profession, the nature of the system's source of funding, the transparency of the system, and the system's historical performance; 

Can the PCAOB find the appointment of an Executive Director of PwC in Malaysia as the Director of the Audit Oversight Board, through the efforts of Chin Kwai Fatt, as well as Johan Raslan's now dead ambition to be the next Chairman of the SC, as evidence of the independence of the system's operation from the auditing profession?
Can the PCAOB satisfy itself that  part 2 (b) of Rule 4012 is met with respect to the registration of PricewaterhouseCoopers Malaysia?

 (2)       the independence of the system from the auditing profession, including

                                    (ii)        whether the person or persons governing the system -

                                                (A)       have been appointed, or otherwise selected, by the government of the non-U.S. jurisdiction, without the approval of, or consultation with, any person affiliated or otherwise connected with a public accounting firm or an association of such persons or firms; 

                                    (iii)       whether a majority of the individuals with whom the system's decision-making authority resides do not hold licenses or certifications authorizing them to engage in the business of auditing or accounting and did not hold such licenses or certificates for at least the last five years immediately before assuming their position within the system;

If the PCAOB conducts an inspection of PricewaterhouseCoopers Malaysia, how will they find the answers to the first three of the eight functional areas in the review of the Firm's practices, policies and procedures?

(1) tone at the top; 

We are still waiting for at least a peep from the top on the allegations against them, so the tone will be one of deafening silence perhaps? And if the PCAOB decides to ask Mr Paul Boorman, the Global Leader for Operations, some questions, will the silence then become unbearable?

Paul Boorman, Global Leader Operations for PricewaterhouseCoopers. 

(2) practices for partner evaluation,  compensation, admission, and 

assignment of responsibilities, and disciplinary actions; 

Can the PCAOB find the appointment of Sham Directors, in a sham company, by the Senior Partners of PricewaterhouseCoopers Malaysia, as sound?

(3) independence implications of 
non-audit services; business ventures, alliances, and arrangements; personal financial 
interests; and commissions and contingent fees; 

Can the PCAOB find the continued existence of PricewaterhouseCoopers Consulting Sdn Bhd (464379-U), to hide contingent liabilities and defraud its creditors, and the appointment of tainted auditors to audit its books, by the Chin Kwai Fatt and Company, and the fact that PricewaterhouseCoopers LLP in the USA, owners of the brand name PricewaterhouseCoopers, have known about this since 2003, and yet chose to remain quiet as nothing to be concerned about?

Can the PCAOB let all these and more go unchecked?

Friday, January 14, 2011

Paul Boorman, either deny the PwC fraud allegations or ask the Malaysian Goons to resign immediately.

The new nickname being bandied around for Johan Raslan and Chin Kwai Fatt is P**cks Without Conscience. How much longer can PricewaterhouseCoopers and Mr Paul Boorman stay silent, now that nothing seems sacred anymore because of the actions of a few Goons in KL?

Mr Paul Boorman, you are the Global Leader for Operations for PricewaterhouseCoopers, and suitably qualified to answer on behalf of Johan Raslan and Chin Kwai Fatt regarding the fraud allegations and the scandalous use of a tainted auditor by the largest audit firm in this country, PricewaterhouseCoopers Malaysia, to audit one of its own companies , a company whose existence has been questioned since 2003.

Mr Paul Boorman, please reply to the fraud allegations against PwC Malaysia
We are not asking this in jest. Do you know that both Johan Raslan and Chin Kwai Fatt are playing cat and mouse with the Malaysian media? They are not even returning phone calls. The very least you can do is get the PricewaterhouseCoopers Global Media Center to deny or answer on behalf of the Country Managing Partner and the Executive Chairman for PwC in Malaysia.

On Wednesday, three different phone calls made to Chin Kwai Fatt, were answered by three different secretaries, who gave three different reasons as to why he cannot come to the phone!!

Chin Kwai Fatt, the Country Managing Partner and Johan Raslan, the Executive Chairman for PwC in Malaysia, have started to play a cat and mouse game with the Malaysian Media because of the ongoing fraud allegations! 
On top of that, are you aware Mr Paul Boorman, that PricewaterhouseCoopers Malaysia is also a Registered Public Accounting Firm with the Public Company Accounting Oversight Board (PCAOB) in Washington, DC, America?

The PCAOB arose after the enactment of the Sarbanes-Oxley Act of 2002, a consequence of accounting scandals like Enron and WorldCom. Apart from the PCAOB, the SOX also covers areas like Corporate and Criminal Fraud Accountability.

Mr Paul Boorman, has PricewaterhouseCoopers Malaysia not infringed on the SOX and PCAOB rules and regulation?

What steps have you taken Mr Paul Boorman, to notify the PCAOB on the allegations of fraud by PwC in Malaysia?

And finally, PCAOB, what are you going to do about this ongoing fraud by PricewaterhouseCoopers Malaysia?

Wednesday, January 12, 2011

Mr Paul Boorman's indifference to the PwC fraud allegations might cost PricewaterhouseCoopers LLP dearly.

British American Tobacco (BAT) are the next major client of PricewaterhouseCoopers, after the Genting Group's dismay at the ongoing PwC fraud, to have serious concerns. 

The Board of Directors and Senior Management of British American Tobacco (BAT) in Malaysia, a company with a market capitalisation in excess of 13 Billion Ringgit, are furious at the lack of response from PricewaterhouseCoopers Malaysia, Dato' Johan Raslan and Mr Chin Kwai Fatt to the allegations of fraud on PwC in Malaysia.

It is very fair of them to be worried about shareholders asking prickly questions in relation to the fraud accusations against their auditors, PricewaterhouseCoopers, in the next AGM, and are being preemptive by referring back to their Global Headquarters as to what can be done.

There are ramifications to PricewaterhouseCoopers LLP as well because of this. There is a chance that the Global Auditors for BAT might change because of Mr Paul Boorman's (PwC's Global Leader for Operations) and Mr Coenie Van Beek's (PwC's Global Leader for Ethics and Business Conduct) continued silence on the fraud allegations against PwC in Malaysia.

Mr Paul Boorman continues to be silent on PwC fraud allegations
As does Mr Coenie Van Beek, despite being the Global Leaders for PwC in Ethics, Business Conduct and Operations.
Will one of the other big firms like Ernst&Young, KPMG or Deloitte become the beneficiary if a major Global Company like BAT decides to change its Auditors?

Mr Paul Boorman and Dr Coenraad Van Beek have been made aware of these allegations since the middle of December last year, but till now there have been no official response from either of their offices. Even worse is that word is coming back that Coenie Van Beek is now nowhere to be seen or heard!

Is indifference or indecisiveness the cause for this silence despite the continued noise about PwC committing fraud in Malaysia?

Or are profits and revenue the only matter of concern for PricewaterhouseCoopers?

What will it take for someone to make the two goons that have placed PwC in Malaysia is such a compromised position to answer?

Will BAT changing their auditors force PricewaterhouseCoopers  to get this two to answer the allegations of fraud?
Have things have changed though, at least as far as the the other 'roles' that were played by Dato' Johan Raslan? He is also the Chairman of the Institute of Corporate Responsibility (ICR), but was strangely absent both from the report and the accompanying picture in the article in StarBiz today, regarding the StarBiz-ICR Malaysia Corporate Responsibility Awards 2010.

(From left) Datuk Kok Wee Kiat, Tan Sri Zarinah Anwar and Datuk Yusli Mohamed Yusoff going through some of the CR reports of listed companies on Bursa Malaysia on Wednesday. (StarBiz)