Johan Raslan: Do you have a conscience?

Sources said PricewaterhouseCoopers Malaysia executive chairman Datuk Johan Raslan was at one point considered for the top post at SC.


It is widely perceived that Zarinah had expressed her desire to step down when her term ends in March this year. However, the search for a suitable candidate for the top post at SC, according to a reliable source, had turned out to be more difficult than envisaged. SC Chief's term may be extended - Anita Gabriel, StarBiz, March 30, 2011

Johan Raslan, The Man who was trying very hard to be the next Chairman of the SC ~ MALAYSIA TODAY

While Malaysians will be happy to see you back in the papers again after so long, why don't you use the opportunity to deny the allegations against you?


Perhaps you can tell the Malaysian public via the media, why you use the firm of Roger Yue, Tan & Associates as the auditors for PricewaterhouseCoopers Consulting Sdn Bhd (464379-U), even though you must have known as a member of the Securities Commission of Malaysia's Corporate Governance Consultative Committee, that the engagement partner for Roger Yue, Tan & Associates was charged by the SC in the Kuala Lumpur Sessions Court for abetting a listed company in submitting false information to Bursa Malaysia?


As the Executive Chairman for PwC Malaysia, how will your decision to use a tainted auditor for a company in which you are the majority shareholder, affect the perception of the public to the others who work in lesser positions in the accounting firm you head?

"Last year, the company’s (Roger Yue, Tan & Associates) managing director and CEO, Datuk Lee Yoon Wah, was compounded RM200,000 because he “knowingly permitted the making of a misleading statement to Bursa”. This relates to United U-Li’s pretax profit as reported in the audited financial statements for the year ended December 2004.

Then, on Tuesday, the SC charged Yue Chi Kin in the Kuala Lumpur Sessions Court for abetting United U-Li in submitting false information to Bursa Malaysia." ~ When Speed Counts : Errol Oh, StarBiz, May 2, 2009

You should not hide behind a carefully crafted public image, when there are serious questions waiting for answers.


If this was to happen in Singapore or Australia, wouldn't you have had to resign from your various positions involving Corporate Governance and Responsibility?


This is what Wikipedia has on the various posts you hold; "Government appointments: Board member of Putrajaya Corporation; member of the International Advisory Panel of the Labuan Financial Services Authority ('LOFSA'); member of the Securities Commission of Malaysia's Corporate Governance Consultative Committee; board member of Kumpulan Wang Persaraan (Diperbadankan) ('KWAP'). He was previously chairman of the Malaysian Financial Reporting Foundation ('FRF'), the body which oversees the Malaysian Accounting Standards Board. During his tenure at FRF, the decision was made to converge Malaysian accounting standards with International Financial Reporting Standards by 2012.

Accounting profession: President of the Malaysian Institute of Certified Public Accountants; Council Member of the Malaysian Institute of Accountants; member of Global Public Practice Committee.

Other appointments: Chairman of Institute of Corporate Responsibility, Malaysia ('ICRM') - a network of companies committed to advancing responsible business practices - ; member of the board of the Kuala Lumpur Business Club; member of the Board of Trustees of the Tun Suffian Foundation; Adjunct Professor of University of Malaya; Trustee of the Sultan Azlan Shah Foundation; Eisenhower Fellow."

We would like to see you back in the media spotlight again, after months of being "away", but can you give Mr Stephen Mead some answers, so the shareholders of Maxis will not have to burn the phone lines trying to call you for answers?

Mr Stephen Mead, Generel Counsel for Maxis

Letter from the General Counsel of Maxis, Mr Stephen Mead. Received from a Maxis insider.

Why Tan Sri T. Ananda Krishnan is furious with PwC: Johan Raslan and Chin Kwai Fatt are evading him

Mr V. U. Kumar is the engagement partner in PwC who handles the Maxis account, but he has been unable to provide the answers to the questions raised by Tan Sri T. Ananda Krishnan over the many allegations of fraud against his fellow senior partners in PwC Malaysia.

The MD, Chin Kwai Fatt, and the Executive Chairman, Johan Raslan, of PwC Malaysia, are evading the questions raised by Maxis and Tan Sri T. Ananda Krishnan

Tan Sri T. Ananda Krishnan had asked V.U. Kumar to answer some questions on the fraudulent acts of Chin Kwai Fatt and other senior partners in PwC Malaysia, but the answers were not forthcoming.


To make matters worse, both Chin Kwai Fatt and Johan Raslan are now evading the queries from Tan Sri Ananda and Maxis, instead of stepping in and giving the explanation which V.U Kumar has failed to provide. 


Shouldn't it be expected that the MD and the Chairman of the largest auditing firm in the country will do whatever is necessary to clear any queries from the second richest man in the country, instead of running away from him?


The media can verify this by calling Maxis and asking for the details of what is happening. 


Why is it so difficult for Chin Kwai Fatt and Johan Raslan to man up and answer the questions from Tan Sri Ananda? 


Haven't they had enough time to figure out some explanation or other as to why they decided to rename PricewaterhouseCoopers Consulting (East Asia) Sdn Bhd, as PwC Consulting Malaysia Sdn Bhd (289801-A) in 2001, and then sell it to IBM Corp as the consulting business in Malaysia?


Can't they come up with an excuse why the real consulting arm of PwC in Malaysia, PricewaterhouseCoopers Consulting Sdn Bhd (464379-U), is still under their control, and why they keep hundreds of millions of Ringgit in contingent liabilities hidden in it till today?


Do Chin Kwai Fatt and Johan Raslan find it so impossible to concoct a story on why they had to appoint Mr Foong Weng Chee and Ms Chu Kum Yoon (both of whom have never been involved in the consulting business of PwC in any way at all) as the Directors for the 'sham' company, PwC Consulting Malaysia Sdn Bhd (289801-A) which they passed off to IBM as the 'real deal', that they have to hide from Tan Sri Ananda?


Chin Kwai Fatt and Johan Raslan run an audit firm that does hundreds of millions of Ringgit in business every year, and we have to wonder how they manage this while hiding from the very individuals who send them a large part of their business.

Former Chairman of PwC, signed a sworn statement that PricewaterhouseCoopers Consulting Sdn Bhd (464379-U) is a member firm of PricewaterhouseCoopers globally. 

Maxis will be holding their EGM soon, and there is a high chance that PwC will be dropped as the auditors for Maxis, but are Chin Kwai Fatt and Johan Raslan planning to keep running away from the questions till that happens?


Don't Chin Kwai Fatt and Johan Raslan have enough talent under their command, that can be ordered to cook up a definitive elucidation on why Chin Kwai Fatt had no choice but to sign a false declaration in 2008, when he said that the firm of PricewaterhouseCoopers Consulting Sdn Bhd (464379-U), at the date of the signing is able to meet its liabilities as and when they fall due, without disclosing the contingent liabilities.


If Chin Kwai Fatt and Johan Raslan cannot even defend their actions to one of their largest clients, isn't it time that they just called it quits and announce their resignation from PwC so that the work that needs to be done to undo the damage they have caused over the years can start?


"Berani bikin, berani tanggung"; any school-kid will be able to understand that, so why is it that Chin Kwai Fatt and Johan Raslan still haven't understood that the buck, in this case, really does stop with them, especially since they are the ones implicated in the fraudulent acts?


Tan Sri T. Ananda Krishnan is a man who has accomplished many great things, and it is unbecoming of Chin Kwai Fatt and Johan Raslan to be evasive when there are serious questions to be answered.

Letter from the General Counsel of Maxis, Mr Stephen Mead. Received from a Maxis insider.

Will the truth about the PKFZ ever come out with PwC and Chin Kwai Fatt being involved in the audit?

“Most importantly, the government has not presented a detailed plan on how the cost of PKFZ project can be prevented from inflating to the expected RM12.5 billion per the report by PwC (accounting firm PricewaterhouseCoopers).

“We call upon the transport minister, who appears to be lost in wonderland, to immediately inform the Parliament and the public on how the government intends not only to implement policies of transparency and accountability to prevent future scandals, but also how it intends to end the agony facing a RM12.5 billion bill for the project,” he demanded. ~ Tony Pua in the Malaysian Insider

Chin Kwai Fatt, MD of PwC Malaysia. Till today he has not denied the fraud involving PricewaterhouseCoopers Consulting Sdn Bhd (464379-U)
and the bogus firm and directors of PwC Consulting Sdn Bhd (289801-A), or been made to answer them. 

How can the truth about the PKFZ scandal ever come out when we have Chin Kwai Fatt as the man who verified that the "report was not tampered with and released in its entirety"? 

Any defense lawyer worth his salt will be able to raise questions against Chin Kwai Fatt and PwC. So how will the courts and the people be able to accept the numbers that have been released?

"We have seen Chin Kwai Fatt rename and sell a company with 'sham directors', just to hide the contingent liabilities in PricewaterhouseCoopers Consulting Sdn Bhd (464379-U).

We have seen Chin Kwai Fatt hire a tainted auditor to audit the books for PricewaterhouseCoopers Consulting Sdn Bhd (464379-U).

We have seen Chin Kwai Fatt sign a false declaration with regards to PricewaterhouseCoopers Consulting Sdn Bhd (464379-U).

We have seen how Chin Kwai Fatt finds it totally acceptable to say that PricewaterhouseCoopers Consulting Sdn Bhd (464379-U) can meet its liabilities as and when they may fall due, when he does not even disclose the several hundred million Ringgit in contingent liabilities it has. He does this even when there is a sworn statement by the Chairman of PwC Malaysia, Dato Johan Raslan, that the Court of Appeal finds the plaintiffs claims against PricewaterhouseCoopers Consulting Sdn Bhd (464379-U) are not manifestly unsustainable, meaning that the chances for these contingent liabilities to fall due are there.

We have seen how Chin Kwai Fatt has done all these and more. And now they want to trust an audit report he has had a major role in to investigate the PKFZ?"

On what basis can any Public Prosecutor go ahead and argue his case when even the audit report on the PKFZ can be brought into question because of the actions of Chin Kwai Fatt & Co?

Until Chin Kwai Fatt is brought to answer the questions above, any 'scandals' or 'fraud' cases which are based upon the findings of PwC Malaysia and Chin Kwai Fatt & Co, will always be open to suspicion that the audit reports themselves might not be totally accurate.

" e-invest.com reported that, "the PKFZ audit report said that the project cost has ballooned from RM1.957 billion to a staggering RM12.453 billion since the inception of the free-trade zone in 2001.

According to the report prepared by PriceWaterhouse Coopers (PwC) - which was released today - the astronomical figure includes interest costs.

The original estimated cost for the land purchase and development works in 2001 was RM1.957 billion... (the) project outlay has escalated to RM3.522 billion as at Dec 31, 2008.

Accompanying Lee to the press conference today was auditors PriceWaterhouse Coopers (PwC) managing director Chin Kwai Fatt and PwC partner, Lim San Pin.

The two were there to verify that the publicly released report was not tampered with and released in its entirety.

Chin Kwai Fatt at the release of the PKFZ audit report. 

However, Lee said that PwC normally does not grant permission for their reports to be made public and thus the firm was releasing the report with three conditions:

• That the reader is not authorised to use or rely on the report to arrive at any conclusion.

• PwC has prepared the report for PKA. Their duty of care is only to PKA and PwC does not owe a duty of care to any other party.

• PwC is not obliged to respond to any queries."

Whither Corporate Governance in Malaysia?

The Financial Crisis Inquiry Commission of the United States of America blamed widespread failure of financial regulators, breakdowns in corporate governance, excessive borrowing and risk by both households and financial firms along with "systemic breaches in accountability and ethics" at all levels for the crisis.

Chin Kwai Fatt, MD of PwC Malaysia. Till today he has not denied the fraud involving PricewaterhouseCoopers Consulting Sdn Bhd (464379-U)
and the bogus firm and directors of PwC Consulting Sdn Bhd (289801-A), or been made to answer them. 

Is Malaysia in a state where it can withstand a financial crisis similar to what happened in the United States after the 'sub-prime' debacle, or can it face the massive questions Japan and its economy are being asked now, post-earthquake?

If the answer is 'no', are we going to do anything about it?

Or are we going to form a commission of inquiry after a financial tsunami hits our shores, and then find the suitable bodies to carry the blame, while the markets are churned by turmoil?

What is the point in having regulators when they cannot even bring themselves to ask the Managing Director of the largest audit firm in the country, Mr Chin Kwai Fatt of PwC, to answer the allegations of fraud that have been raised against him and his firm?

It is an undeniable fact that PwC has its partners holding key positions in the various regulatory and accounting oversight bodies in this country, but does that mean that they are now in a position that is beyond reproach? Does this not make the audits they do for a hundred odd public listed companies and many other GLC's suspect in the eyes of the investors and the taxpayers?

"If we scroll through the regulators, and other influential bodies in the auditing world, like the Securities Commission, the Audit Oversight Board (AOB), the Malaysian Institute of Accountants (MIA), the Malaysian Institute of Certified Public Accountants (MICPA), the Malaysian Accounting Standards Board (MASB), the Financial Reporting Foundation, we can find a common element that compromises the ability of these regulators to act decisively on the fraud perpetrated by PwC Malaysia.

The Audit Oversight Board's Director is a former PwC man, while it's Chairman, En Nik Hasyudeen, is an old friend of Chin Kwai Fatt, the MD of PwC Malaysia.

Mr VU Kumar, a senior partner in PwC Malaysia, sits on the investigation committee of the MIA.

Dato' Johan Raslan, the Chairman of PwC Malaysia, is also the President of the MICPA. He is also a member of the Securities Commission of Malaysia's Corporate Governance Consultative Committee. He was also the former Chairman for theFinancial Reporting Foundation, which now sees Ms Loh Lay Choon, a partner in PwC sitting on its board.

En Mohammad Faiz Azmi, a partner in PwC Malaysia, is the Chairman of the MASB, and another partner of PwC, Ms Ng Mi Li also sits on the MASB board."


The continuing silence from the Regulators, PwC Malaysia, PwC's Global Leaders and the senior partners like Chin Kwai Fatt and Dato' Johan Raslan in face of all this questions only serves to further increase the suspicion that the senior partners in PwC Malaysia implicated in PricewaterhouseCoopers Consulting Sdn Bhd (464379-U) have no place to hide their acts but behind this deafening wall of silence.


Can this country, take a single step towards having the system of corporate governance that ensures our corporations are truly capable of withstanding shocks to the financial system, if we cannot even answer the questions that are already being raised?


Is there any regulator or watchdog out there, that is doing its job?

PwC's Paul Boorman and TEPCO : The Link

TEPCO (Tokyo Electric Power Company) not reporting issues at plants seems to be a common trend at the company. In 2002, the president and 4 executives resigned, after it was discovered that repair and inspection records were falsified. What was covered up? Cracking in a key component within the reactor vessel of all their reactors, leading to the shutdown of all 17 of their reactors. And again cover-ups in 2007, when TEPCO reported a only a small fire and 1 gallon of water, when actually the fire lasted for 2 hours and 100′s of gallons of radioactive water leaked into the sea. And which nuclear plant has reported to have the most issues? The Fukushima Diachi plant, the nuclear plant facing issues now. ~japanearthquake.org

TEPCO is a prime example of a company that has placed profits above corporate values. And what links TEPCO to PwC is this unconscionable ability to always look at the bottom line first, above all else.

In TEPCO's case, its regulator is the Japanese Government, which has also been found wanting in the way they have allowed TEPCO, a private company to decide the response to the nuclear catastrophe. While the people of Japan are winning admiration around the world for the way they are facing up to this crisis, their government has shown signs that it does not deserve the same admiration.

TEPCO “hesitated because it tried to protect its assets,” Akira Omoto, a former TEPCO executive and member of the Japan Atomic Energy Commission, told the financial newspaper. A government official stated: “This disaster is 60 percent man-made. They failed in their initial response. It’s like TEPCO dropped and lost a 100 yen coin while trying to pick up a 10 yen coin.”~www.globalresearch.ca

In PwC's case, Mr Paul Boorman, who is the Global Leader for Operations in PwC, is allowing the crisis in PwC Malaysia due to the ongoing fraud perpetrated by the country managing partner, the MD, Chin Kwai Fatt, to continue without a single peep of protest.

Mr Paul Boorman, Global Leader for Operations in PwC, is very quiet when it comes to the ongoing fraud by PwC Malaysia.

Just as the Japanese Government has shown its willingness to risk its peoples lives just so that TEPCO can protect its investments, Paul Boorman is allowing the values that are enshrined in the PwC Global Code of Conduct to be sacrificed so that PwC Malaysia can continue churning a profit.

Here, we asked that, "efforts be taken by the global office to dissolve PricewaterhouseCoopers Consulting Sdn Bhd (464379-U) by the end of February 2011, as there is no rational explanation for its continued existence except to defraud creditors by hiding its contingent liabilities. This is inexcusable for any entity, and doubly so for an auditing firm of PwC's repute."

It is now approaching the end of March, and till now PricewaterhouseCoopers Consulting Sdn Bhd (464379-U) has been allowed by Paul Boorman and the other Global Leaders to remain as it was before, defrauding its creditors, and hiding hundreds of millions in contingent liabilities.

If the fact that companies like TEPCO and PwC Malaysia can find it in themselves to place profits above values is worrying, the ability of those responsible for oversight of this recalcitrant corporations to sit by and do nothing even when they become aware of the fraud is truly sickening. It becomes an indication that the 'rot' may have set in too deep into the system, that to even find those 'few good men' who still have some sense of responsibility in organizations and systems like these, is an impossible task.

While the damage caused by TEPCO's actions is now clear for all to see and act against, we wonder what further damage PwC Malaysia under Chin Kwai Fatt will have to cause before action is taken against those that deserve it.

Chin Kwai Fatt, MD of PwC Malaysia. Till today he has not denied the fraud involving PricewaterhouseCoopers Consulting Sdn Bhd (464379-U)
and the bogus firm and directors of PwC Consulting Sdn Bhd (289801-A), or been made to answer them. 

Datuk Seri Ahmad Zubir, Dato' Johan Raslan and PwC

It's been reported that Datuk Seri Ahmad Zubir  wants 22 other Sime Darby Directors brought into the legal suit over losses from the Bakun dam project.


The notice also stated that the grounds for its claims “are that at all times material to this action you were a member of one of more of the Board of Directors of the Plaintiffs herein representing the highest decision making bodies of the Plaintiffs and as such you owed a duty to exercise due skill, care and diligence in the exercise of your duties”.


Ahmad Zubir, in his statement of defence, had accused the plaintiffs of "selective prosecution", saying they had disregarded the functions of various board committees, the collective responsibility of the main board of the group and the supervisory committee.

Datuk Seri Ahmad  Zubir believes that the Directors of Sime Darby owed a duty to exercise due skill, care and diligence in the exercise of their duties.

Must questions of collective responsibility as well as the duty to exercise due skill only be brought into play when matters have escalated to losses in the amounts of hundreds of millions of Ringgit?


Datuk Seri Ahmad Zubir must also get his former fellow Directors to answer collectively on why they retained PwC Malaysia as their auditors, when PwC Malaysia and its MD, Chin Kwai Fatt, find it reasonable to commit fraud to hide hundreds of millions of Ringgit in contingent liabilities themselves, to defraud creditors?


In the good old days before the losses hit the headlines, Sime Darby paid RM 18.1 million in audit fees and 4.3 million in non-audit fees to PwC for 2009, while in 2008 the payments were 15.2 million and 4.3 million respectively.


For this multi-million Ringgit auditor work that Sime Darby needs, shouldn't the Board of Directors ensure that the auditors are beyond reproach in any matter imaginable?


Did the Board question the engagement partner, Dato' Johan Raslan, the Executive Chairman of PwC Malaysia, on why the firm of PricewaterhouseCoopers Consulting Sdn Bhd (464379-U) was not sold to IBM Corp together with the rest of the PwC consulting business worldwide, back in 2002?

Did the Board of Directors of Sime Darby ask Johan Raslan the necessary questions before giving PwC the multi-million Ringgit audit job?

Did the Board of Directors of Sime Darby, exercise due skill and care when PwC were retained as auditors despite the fact that the MD of PwC had signed a false declaration in 2008, which is an offence under the Malaysian Penal Code? Did they ask why he signed off that the firm of PricewaterhouseCoopers Consulting Sdn Bhd (464379-U), at the date of the signing is able to meet its liabilities as and when they fall due, without disclosing the several hundred million in contingent liabilities hidden in it. 


Did the Board of Directors of Sime Darby exercise the necessary diligence, and ask Johan Raslan why two individuals known as Foong Weng Chee and Chu Kum Yoon were hired as Directors for a company known as PwC Consulting Sdn Bhd (289801-A), even though these two have never been involved in the PwC Consulting business in any way?


Did the Board of Directors of Sime Darby ask Johan Raslan on why PricewaterhouseCoopers Consulting Sdn Bhd (464379-U), in which both he and Chin Kwai Fatt are Directors, will use the services of a tainted auditor for its own books?


Should not the Board of Directors of Sime Darby also explain to the shareholders why they chose PwC Malaysia as the external auditors despite all the evidence that points to an ongoing fraud within PwC itself to this very day?


With all the questions hanging over the heads of the auditor, PwC Malaysia, itself, to what extent can the shareholders and investors 'buy' the numbers that are in the annual report for Sime Darby?

Chin Kwai Fatt, MD of PwC Malaysia. Till today he has not denied the fraud involving PricewaterhouseCoopers Consulting Sdn Bhd (464379-U)
and the bogus firm and directors of PwC Consulting Sdn Bhd (289801-A)

What Idris Jala said he did not know about PwC

Dato' Sri Idris Jala attended the PwC Global CEO Survey Dialogue on the 3rd of March, 2011. He  was not made fully aware of the fraud allegations against PwC and Chin Kwai Fatt, and blames PEMANDU for it. 


Dato' Sri Idris Jala is understandably miffed at being unaware of the many questions which PwC in Malaysia is trying to get away from answering.

First of all there is the matter of PricewaterhouseCoopers Consulting Sdn Bhd (464379-U). In 2002, IBM Corp acquired PwC Consulting worldwide, which includes PricewaterhouseCoopers Consulting Sdn Bhd (464379-U), the consulting arm of PricewaterhouseCoopers in Malaysia.


Instead of disposing  PricewaterhouseCoopers Consulting Sdn Bhd (464379-U) as required, PwC Malaysia and Chin Kwai Fatt did this. A company known as PricewaterhouseCoopers Consulting (East Asia) Sdn Bhd, was renamed as PwC Consulting Malaysia Sdn Bhd (289801-A) on 20-11-2001 to fulfill the terms of the global acquisition of the PwC consulting business.

Dato' Sri Idris Jala is understandably miffed at PwC Malaysia.

Chin Kwai Fatt & Co did this to hide several hundred million in contingent liabilities in
PricewaterhouseCoopers Consulting Sdn Bhd (464379-U). 

In order to complete the sale of the 'sham' company known as PwC Consulting Malaysia Sdn Bhd (289801-A) to IBM Corp, Chin Kwai Fatt & Co hired a couple of 'sham' Directors into that company. 


They hired a Mr Foong Weng Chee as a Director in PwC Consulting Sdn Bhd (289801-A), even though he has his own accounting firm called Foong Weng Chee & Co, and has been running it since before 2002, and has never been involved in the PwC Consulting business in any way.


They also hired a Ms Chu Kum Yoon, a Company Secretary as a Director in PwC Consulting Sdn Bhd (289801-A), even though she also has never been involved in the PwC Consulting business in any way.


They also hired an audit company (whose engagement partner had been charged by the Securities Commission for abetting a listed company in submitting false information to Bursa Malaysia) called Roger Yue, Tan and Associates, as the auditors for PwC Consulting Sdn Bhd (289801-A).


Dato' Sri Idris Jala did not know this, or he would have wondered why the largest audit firm in the country would use the services of a tainted auditor for its own consulting company.


Chin Kwai Fatt & Co did all this even though the then Chairman of PricewaterhouseCoopers Malaysia, Raja Tan Sri Dato' Seri Arshad,signed a sworn statement in which it is attested that PricewaterhouseCoopers Consulting Sdn Bhd (464379-U) is a member firm of the global organisation of PricewaterhouseCoopers.


Dato Sri Idris Jala also did not know, that Chin Kwai Fatt went to the extent of signing a false declaration in 2008, that the firm of PricewaterhouseCoopers Consulting Sdn Bhd (464379-U), at the date of the signing is able to meet its liabilities as and when they fall due, without disclosing the several hundred million in contingent liabilities hidden in it. 


Chin Kwai Fatt did this even though he knew that in another sworn statement by Dato Johan Raslan, the current Chairman of PwC in Malaysia, it is stated that the Court of Appeal finds that the claims made against PricewaterhouseCoopers Consulting Sdn Bhd (464379-U) by its various creditors, could not be said to be manifestly unsustainable. 


Dato' Sri Idris Jala did not know that Chin Kwai Fatt had so brazenly signed a false declaration, even though without a doubt, Chin cannot state that PricewaterhouseCoopers Consulting Sdn Bhd (464379-U), is able to meet its liabilities as and when they fall due. 


Would Dato' Sri Idris Jala been as happy to accept the invitation from PwC to attend the PwC Global CEO Survey Dialogue if he had known all this and more?

Chin Kwai Fatt, MD of PwC Malaysia. Till today he has not denied the fraud involving PricewaterhouseCoopers Consulting Sdn Bhd (464379-U)
and the bogus firm and directors of PwC Consulting Sdn Bhd (289801-A)

CIMB Group - Non-Audit Fees Dilemma

CIMB Annual Report 2009

"Where a statutory audit client is an entity of significant public interest, the significance of the threat should be evaluated and, if the threat is other than clearly insignificant, safeguards such as those in 290.206 should be considered and applied as necessary to reduce the threat to an acceptable level in all cases where:

(a) the amount of the fees received for the non-audit services compared to the total annual audit fees is 50% or more;or

(b) the total size of the non-audit fees paid for the services is significant."
SG290.206B (Accounting and Corporate Regulatory Authority, Code of Professional Conduct and Ethics Consultation Document 2007)

CIMB has managed to reduce the size of the fees paid for non-audit services from 8.03 million Ringgit in 2008 to 3.3 million Ringgit in 2009. Nevertheless, by Singapore's guideline, the payment of 2.36 million Ringgit for non-audit services to PricewaterhouseCoopers Malaysia, will be considered significant.

Since this large payment will not be allowed in Singapore, why do it in Malaysia?

In 2008, PricewaterhouseCoopers Malaysia earned RM 1.19 in non-audit fees for every Ringgit of audit fees it was paid by CIMB. In 2009, it still earned RM 0.77 in non-audit fees for every Ringgit in audit fees it collected from CIMB.

The following is a question asked by the International Federation of Accountants in their Good Practice Guidance, released in October of 2010.

Does the Firm deliver non-audit services to the entity in a manner that non-audit fees may exceed audit fees or be seen to impair auditor independence?

The same guide also quotes the Australian oversight body as saying;
"Across most Firms, we continue to note deficiencies in the application of policy for both the adequacy of documentation supporting the decision to provide non-audit services for audit clients…"

CIMB must ask itself which is more important; the fees its external auditor, PricewaterhouseCoopers Malaysia, earns from doing non-audit work for CIMB, or the interests of its shareholders?

Can CIMB assure its shareholders that the external auditors, PricewaterhouseCoopers Malaysia, is totally immune to the threat of self-interest? Is there any business entity in the world that is immune to profit?

When PwC Malaysia does not even adhere to its own code of conduct, can CIMB then assure the shareholders that PwC will adhere to the code of conduct of the International Federation of Accountants?

When even the regulators turn a blind eye towards the fraud perpetrated by PwC in Malaysia, can CIMB then assure the shareholders they get the best possible in terms of an independent audit every year?

The shareholders will act based upon their own perception of the value of a company. No company, large or small, must ever forget that.

Chin Kwai Fatt, MD of PwC Malaysia. Till today he has not denied the fraud involving PricewaterhouseCoopers Consulting Sdn Bhd (464379-U)
and the bogus firm and directors of PwC Consulting Sdn Bhd (289801-A)

Bursa Malaysia, MSWG and the PwC lobby

Letter from the General Counsel of Maxis, Mr Stephen Mead. Received from a Maxis insider.

"People rely extensively on the advice of experts. Often, these experts face conflicts of interest between their own self-interest and their professional obligation to provide good advice. Conflicts of interest played a central role in the corporate scandals that shook America at the turn of the twenty-first century.

And auditors charged with independently reviewing  a firm's financial report have often been found to be complicit with firm management in this effort (Levitt & Dwyer,2002). Accounting firms have incentives to avoid providing negative audit opinions to the managers who hire them and pay their auditing fees."

Conflicts of Interest and the Case of Auditor Independence - Moral Seduction and Strategic Issue Recycling by Don a. Moore, Philip E Tetlock, Lloyd Tanlu and Max H. Bazerman

To what extent can investors accept that auditor independence has not been compromised in a case like this, with Axiata paying more to PricewaterhouseCoopers for non-audit serves (NAS) than for the audit itself?

In a study conducted by UPM in 2006, it was found that :
"76% of the auditors, all of the loan officers and 91% of the senior
managers of public listed companies agreed with the statement that the provision of
NAS (non-audit services) to audit clients by audit engagement staff would threaten auditor independence".

If only 24% of the auditors, absolutely none of the loan officers, and a mere 9% of the senior managers of PLC's believe that auditor independence is not compromised by the provision of non-audit services to clients, on what basis is a 'laissez-faire" attitude still adopted by the regulators and the watchdogs in this country towards the question of NAS and auditor independence?

Bursa Malaysia's Chief Regulatory Officer, Ms Selvarany Rasiah; Ms Rita Benoy Bushon, CEO of the Minority Shareholder Watchdog Group (MSWG), and Dato' Johan Raslan, the Executive Chairman of PwC Malaysia in a group photo.

We have seen how the regulators in this country are able to remain silent even when questions of outright fraud are raised against PwC Malaysia, does this then mean that the PwC lobby is so influential that they can get away with anything at all?

Why hasn't Bursa Malaysia or the MSWG questioned PwC Malaysia on its non-audit services to its audit clients, especially when the fees earned for the non-audit work far exceeds the audit fees?

The study by UPM also found that the disclosure of NAS will prompt shareholders to asses the amount of money paid to the auditor and ask questions if they were not comfortable with it:
"A partner of a medium size audit firm noted:
It will create awareness among the public, shareholders and stakeholders.
It also triggers them to ask question in the AGM, like ‘Who is the auditor
and consultant, and how will the management ensure there is a split of
independency(sic) between the two?’ If we don’t have such disclosure, it is not
fair to the public, who have a lack of knowledge on the operation side."
It is not fair to the public! Can there be a simpler statement that should induce regulators and the watchdogs, especially those that are there to protect the small investor, to take appropriate action?

When our neighbours, and even economy's that are far larger and more complex than our own, are able to ensure that the question of auditor independence is addressed in the clearest manner possible, why must Malaysians be forced to accept a 'tidak-apa' attitude towards the questions that have been raised by the International Federation of Accountants itself towards auditor independence and non-audit fees?

Who is there to ensure that the following threats listed by the International Federation of Accountants do not affect auditor independence in Malaysia?
1. Self interest threat?
2. Self review threat?
3. Advocacy threat?
4. Familiarity threat?
5. Intimidation threat?

But for us in Malaysia, we have to add one more threat to the list.
6. Commit blatant fraud and get away with it threat?

Chin Kwai Fatt, MD of PwC Malaysia. Till today he has not denied the fraud involving PricewaterhouseCoopers Consulting Sdn Bhd (464379-U)
and the bogus firm and directors of PwC Consulting Sdn Bhd (289801-A)

Burning questions for Ms Selvarany Rasiah to answer: If you want Bursa Malaysia to be a world class bourse, the critical issue of non audit fees must be addressed.

Letter from the General Counsel of Maxis, Mr Stephen Mead. Received from a Maxis insider.

Ms Selvarany,

Bursa Malaysia aspires to be the preferred partner in Asia for fund-raising, trading and investment; or in other words, a world class bourse.

How will this aspiration become a reality when the accounting firms are allowed to provide non audit services  to the Public Listed Companies at a level which will not be allowed even in Singapore?

"Where a statutory audit client is an entity of significant public interest, the significance of the threat should be evaluated and, if the threat is other than clearly insignificant, safeguards such as those in 290.206 should be considered and applied as necessary to reduce the threat to an acceptable level in all cases where:


(a) the amount of the fees received for the non-audit services compared to the total annual audit fees is 50% or more;or


(b) the total size of the non-audit fees paid for the services is significant."
SG290.206B (Accounting and Corporate Regulatory Authority, Code of Professional Conduct and Ethics Consultation Document 2007)

Non audit fees paid to PricewaterhouseCoopers far exceeds the audit fees

Ms Selvarany Rasiah, Chief Regulatory Officer for Bursa Malaysia

Auditor Independence is considered as the cornerstone of the auditing profession as it forms the foundation of the public's trust in the accounting profession.

The United States of America, the United Kingdom, South Africa, Belgium, Singapore and many other countries have taken the steps to address the question of non-audit fees. What is Bursa Malaysia's stand on this burning question?

Even the Teachers Pension Plan group of Ontario, Canada has this rule for investing:

"1.5 Non-Audit Fees Compromise Independence

Guideline:

A significant majority of revenues generated by the accounting firm through its relationship with the company should come from the audit function proper. Where there is no disclosure or a breakdown of the fees shows the non-audit fee is greater than the audit fee without further clarification, we will not support the re-election of the outside auditor.

Discussion:

We are committed to the principle of the independence of external auditors and we have accordingly recognized these principles within our own proxy voting guidelines. Shareholders must be able to rely on the independent auditor. If they perceive that there is a lack of independence, whether or not such a deficiency exists, much of that value is lost."

If a group of teachers can state their stand on the question of Auditor Independence so clearly, why can't Bursa Malaysia, which is a front-line regulator tasked with protecting the interests of the investors and the citizens, at least do the same?

If auditors claim that non-audit fees will have no impact on their independence when signing the audit findings,
why then have the non-audit fees fallen from a high of 51% of total fees received to about 21% in the worlds largest economy?

Ms Selvarany, what is Bursa Malaysia's answer to all the threats that arise to the question of auditor independence because of non-audit fees and services, as shown by the International Federation of Accountants above?

Chin Kwai Fatt. Till today he has not denied the fraud involving PricewaterhouseCoopers Consulting Sdn Bhd (464379-U)
and the bogus firm and directors of PwC Consulting Sdn Bhd (289801-A)