Axiata Group Malaysia and the Sarbanes-Oxley Act (SOX)

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

The auditor independence provisions of SOX were strongly influenced by the fact that Arthur Andersen received $25 million in audit fees and $27 million in consulting fees from Enron in the years prior to its bankruptcy filings. 

Sarbanes-Oxley For Dummies

 By Jill Gilbert Welytok

Axiata Group is just one of the many Public Listed Companies that PricewaterhouseCoopers has 
as its client. As can be seen in the snapshot above of Axiata Group's last audited statement taken 
from the Bursa Malaysia website, the non audit fees paid out by Axiata to PricewaterhouseCoopers 
is greater that the fees paid for the audit work.


"Auditors have grown overly reliant on consulting business from their clients. According to a recent study by University of Illinois professor Andrew D. Bailey, among 563 companies examined under new SEC disclosure rules, only two paid no non-audit fees to their auditor, and, on average, clients reported paying their accountant $2.69 in fees for non-audit services for every dollar spent on audit fees. In some cases, however, the imbalance was far greater. In the most extreme examples, Puget Energy paid PricewaterhouseCooper $17 million for non-audit fees and just $534,000 for its audit.


The lure of this enormous compensation for non-audit services is the reason that the SEC, in 2000, proposed rules severely restricting auditors from providing consulting services to their clients, to ensure that their "public watchdog" role came before their self-enrichment goal. The SEC began its proposal with the following statement: 


"Independent auditors have an important public trust. Every day, millions of people invest their savings in our securities markets in reliance on financial statements prepared by public companies and audited by independent auditors… If investors do not believe that the auditor is truly independent from the issuer, they will derive little confidence from the auditor's opinion and will be far less likely to invest in the issuer's securities. Fostering investor confidence, therefore, requires not only that auditors actually be independent of their audit clients, but also that reasonable investors perceive them to be independent."

The SEC went on to say: "We have become increasingly concerned that the dramatic increase in the nature, number, and monetary value of non-audit services that accounting firms provide to audit clients may affect their independence." Enronwatchdog.org


The two most important provisions under the Sarbanes-Oxley Act of 2001 were the setting up of the 
Public Company Accounting Oversight Board (PCAOB), which the Securities Commission of Malaysia 
has attempted to emulate via the Audit Oversight Board, and the prohibition of auditors from performing 
certain non audit services for their audit clients.


The effect of the SOX in restoring public confidence and enhancing corporate governance in America 
is a testimony to the seriousness with which the regulators in the United States viewed the lack of 
proper self-regulation by the accounting firms.


Malaysia has had its share of corporate scandals, some of which are still ongoing, but the critical area of non 
audit fees, has still been left to the accounting firms to self regulate. Even though PricewaterhouseCoopers 
knows it will have a tough time explaining the fees they are earning from the non audit work they perform 
for the Axiata Group, the fact that there is no regulator here to ask them those questions means that they 
can get away with putting profit above questions of independence.

Dato' Sri Jamaludin Ibrahim, Group CEO of Axiata, and former CEO of Maxis

Axiata has a market capitalisation in excess of 41 billion Ringgit. Can there be any questions at all 
regarding the independence of the auditors of a PIE like Axiata, when billions upon billions of the 
rakyat's money is dependent on the audited financial statements?

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

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)

Will Tan Sri T. Ananda Krishnan drop PwC as the Maxis auditors: Will Ernst & Young be the beneficiaries of this ongoing PwC fraud?

In Corporate Malaysia, being recalcitrant and fraudulent sometimes pays. A key study of PwC Malaysia.

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

Until and unless PwC Malaysia starts losing its clients like CIMB, Sime Darby, Maxis, Tenaga Nasional Berhad,  Genting, British American Tobacco Malaysia, Telekom Malaysia, IJM  and dozens more, they will not change their ways.

Our sources have told us that Tan Sri T. Ananda Krishnan is really pissed off with PwC. The change in auditors will come in the next AGM, or Tan Sri Ananda can call for an EGM in the coming months.

Tan Sri T. Ananda Krishnan's problem right now is that he has crooked auditors in the form of PwC Malaysia. To add insult to injury, it is apparent that none of the regulators in Malaysia have the gumption to act on PwC.

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) 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 the Financial 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.

As the largest auditing firm in the country, PwC Malaysia has its partners in nearly all the key regulatory and professional bodies in this country. 

Sridharan Nair, his role in PwC is non-Audit income activities. Story coming soon.

The regulators can safely ignore the burning questions regarding the ongoing fraud perpetrated by PwC Malaysia, because they answer only to themselves, as the Latin phrase puts so aptly, "Quis Custodiet Ipsos Custodes?".

"Who will guard the guards themselves?" is the burning question Malaysians must ask themselves, as it is obvious that when left to their own devices, the regulators can afford to ignore any questions that may upset the status quo in their own organisations.

But there is one area where the regulators and the auditors, whom they are supposed to be 'regulating', have no control over. No one can dictate to the corporations and their shareholders, that they must hire this or that accounting firm as their auditors.

The shareholders are able to exercise their rights to ask for a change of auditors when they see that the current firm is not the bulwark of ethical conduct that it purports itself to be. They can bring the guilty firms to task, not by praying and hoping that the regulators will do their job, but by punishing the accounting firm where it will hurt the most, in their pockets.

In PwC's case, it does seem that the only way they will change their ways is when the exodus of clients gives them no choice but to clean up their act.

If this means that they will have to remove their partners who are guilty of fraudulent behavior and acts, as well as  put a stop to any ongoing acts of fraud, then that is what they must do. The alternative is of course to go the way of Arthur Andersen, and end up as a mere footnote in moral stories aspiring accountants will read.

PwC Malaysia must realize that the questions raised against them are now one of the major talking points amongst shareholders of many, if not all of their clients. And that the 'elegant silence' they choose to maintain is hurting them more than even the allegations themselves.

The point where PwC Malaysia must either break its silence and force Chin Kwai Fatt and Co to face the music, or find itself writing its own obituary is fast approaching, and the longer it takes to do what is right, the greater will be the number of its clients who have abandoned its sinking ship.

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

Chin Kwai Fatt, the mastermind behind the ongoing fraud involving PricewaterhouseCoopers Consulting Sdn Bhd (464379-U)
 is now aggressively lobbying his old buddy, Idris Jala, and PEMANDU, for ETP jobs. (story coming soon)

MSWG (Minority Shareholder Watchdog Group) - Will You Speak On Behalf Of The Minority Shareholders of Maxis?

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

Ms Rita Benoy Bushon, the Chief Executive Officer of MSWG

Ms Rita Bushon, if you refer to the letter above, from the General Counsel of Maxis Mr Stephen Mead, the minority shareholders of Maxis have been asked to take up their concerns regarding PwC as the auditors for Maxis, with the appropriate regulatory authorities or directly with PwC themselves.

Will you now stand up and speak on behalf of the minority shareholders of Maxis? Please call Mr Stephen Mead to get a copy of the complaint letters from the minority shareholders.

You will find that the minority shareholders are concerned with:

1. The fact that PricewaterhouseCoopers Malaysia, under it's MD Mr Chin Kwai Fatt, have managed to hide several hundred millions of Ringgit in contingent liabilities under a company called PricewaterhouseCoopers Consulting Sdn Bhd (464379-U).


2. That despite the global sale of the consulting business of PwC to IBM Corp in 2002, Chin Kwai Fatt & Co have managed to retain the control and ownership of PricewaterhouseCoopers Consulting Sdn Bhd (464379-U), by renaming PricewaterhouseCoopers Consulting (East Asia) Sdn Bhd as PwC Consulting Sdn Bhd (298801-A) to become a substitute for the real consulting arm of PwC Malaysia, PricewaterhouseCoopers Consulting Sdn Bhd (464379-U) in the sale to IBM Corporation worldwide.

3. That Chin Kwai Fatt & Co also appointed Ms Chu Kum Yoon, a Company Secretary, and Mr Foong Weng Chee, who runs his own accounting firm, as the Directors for PwC Consulting Sdn Bhd (289801-A). This was done despite the fact that these two 'sham Directors" have never been involved with the consulting business of PricewaterhouseCoopers in any way. All these and more has been done just to defraud the creditors of PricewaterhouseCoopers Consulting Sdn Bhd (464379-U).

4. That despite the fact that Raja Tan Sri Dato' Seri Arshad (the former Chairman of PwC), who signed a sworn statement  in 2001 in which it is attested that PricewaterhouseCoopers Consulting Sdn Bhd (464379-U) is a member firm of the global organisation of PricewaterhouseCoopers; 

5. As well as another sworn statement by Dato Johan Raslan, the current Chairman of PwC in Malaysia, in which it is stated that the Court of Appeal finds that the claims made against PricewaterhouseCoopers Consulting Sdn Bhd (464379-U) could not be said to be manifestly unsustainable, Chin Kwai Fatt still signed 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 contingent liabilities.

6. Furthermore PricewaterhouseCoopers Consulting Sdn Bhd (464379-U)  ceased operations in 2006, so there is no way for it meet its cash flow solvency against several hundred million in contingent liabilities, and neither is it demonstrated that PricewaterhouseCoopers Consulting Sdn Bhd (464379-U) is able to meet its balance sheet solvency test. Even then, another Senior Partner in PwC Malaysia, Khoo Chuan Keat signs a false declaration in 2009 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.

Which appropriate regulatory body will take action against PwC in this country? The fraud has been ongoing for more than 9 years now, and yet there has been not a single regulator who has taken action against PwC.

Mr Stephen Mead has also asked the minority shareholders to try to address the concerns to PwC directly, but will PwC even bother to reply, seeing that there is no relationship between the minority shareholders and the company auditors?

No shareholder, whether big or small, will be able to stomach the fact that they cannot get any answers when their company auditors are implicated in fraudulent acts, or that there is no regulatory body that seems to be able to question the auditors.

Ms Rita Bushon, will you now stand up for the minority shareholders of Maxis, and get them the answers they want to the burning questions above?

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

Chin Kwai Fatt, the mastermind behind the ongoing fraud involving PricewaterhouseCoopers Consulting Sdn Bhd (464379-U)
 is now aggressively lobbying his old buddy, Idris Jala, and PEMANDU, for ETP jobs. (story coming soon)