KUALA LUMPUR (Aug 4): Serba Dinamik Holdings Bhd and its three subsidiaries, all of which are currently in liquidation, have filed a civil suit against KPMG PLT, seeking at least RM1.56 billion (US$391 million) in damages plus interest for alleged negligence in the audits of the group between financial years 2016 and 2019.

According to the statement of claim filed in the Shah Alam High Court dated Aug 2, 2026, the four companies in liquidation, acting through liquidator Victor Saw Seng Kee, argued that the group took significant financial actions based on the clean audit opinions issued by KPMG during that period. Saw is attached with PricewaterhouseCoopers Advisory Services Sdn Bhd.

The oil and gas services provider in 2021 disputed audit issues raised by KPMG's during its audit. KPMG resigned without completing the audit and following a legal dispute but Serba Dinamik fell into Practice Note 17 in 2022 after another auditor issued a disclaimer of opinion on its accounts.

However, the suit argued that if KPMG had performed adequate audit procedures, it would have uncovered the misstatements much earlier instead of only raising serious concerns during the FY2020 audit.

The suit alleges that reliance on these audits resulted in the group paying out:

· RM1.795 billion in dividends that could not have been paid if the true financial state were known.

· RM851 million in finance costs, including interest and profit payments, arising from the group’s borrowings and financing.

· RM161.5 million in income taxes paid on purported profits that were actually the result of overstated revenue.

The four companies in liquidation are Serba Dinamik Holdings Bhd (SDHB), Serba Dinamik Sdn Bhd (SDSB), Serba Dinamik Group Bhd (SDGB) and Serba Dinamik International Ltd (SDIL).

Serba Dinamik and four of its senior executives, including its CEO and MD Datuk Mohd Abdul Karim Abdullah, have been charged by the Securities Commission (SC) in 2021 for submitting a false statement to the exchange regarding its RM6.014 billion revenue for FY2020, resulting in a total of RM16 million in compounds.

Serba Dinamik was finally delisted from Bursa Malaysia on June 5, 2024, following its failure to submit its PN17 regularisation plan.

According to a statement of claim sighted by The Edge, the plaintiffs alleged that KPMG failed to identify massive revenue overstatements that ultimately led to the group’s collapse.

The plaintiff asserts that the group's reported financial statements for FY2016 to FY2019 by KPMG were significantly misstated, failing to provide a “true and fair view” of its affairs, with reported revenues overstated by between 62% and 87% each year.

Upon investigations by the liquidator, it was alleged that the overstatements were primarily driven by fictitious sales to seven domestic customers via SDSB and 13 international customers via SDIL.

For instance, in FY2018, the group's reported consolidated revenue of RM3.28 billion was allegedly overstated by RM2.85 billion (87%). By FY2019, SDSB purportedly reported RM1.13 billion in sales to seven domestic customers but those customers confirmed actual sales of only RM32.3 million, which is an overstatement of over RM1.1 billion.

"The financial statements were materially misstated because KPMG failed to properly plan and conduct adequate audit procedures to obtain sufficient appropriate audit evidence," said the liquidator in the claim.

The plaintiffs further alleged that KPMG failed to exercise professional scepticism despite unusual revenue growth, particularly within SDIL, and negligently allowed company staff to interfere with the external audit confirmation process.

The plaintiffs are seeking damages to be assessed (currently valued at no less than RM1.56 billion) representing the losses suffered through dividends, finance costs and excess taxes, along with pre-judgment interest at 5% per annum from the dates the losses were incurred.

“Had KPMG complied with its professional duties, the group would have been liquidated much sooner than January 2023 … preventing the massive accumulation of debt and capital depletion,” the plaintiffs noted.

The group's current liquidator was appointed on Jan 10, 2023, after the High Court ordered the liquidation of the four entities.

This article has been updated for accuracy.