Minority shareholders may look to EPF and KWAP for truth of Serba Dinamik’s financials

TheEdge Sat, May 29, 2021 06:18pm - 2 years View Original


KUALA LUMPUR (May 29): The Minority Shareholders Watchdog Group (MSWG) issued a statement today to urge the minority shareholders of Serba Dinamik Holdings Bhd not to change the company’s external auditor KPMG, citing this is a way to uncover the truth of the audit issues brought up by the auditor. 

In the statement, the MSWG said KPMG should be allowed to complete its work and report to shareholders in the upcoming annual general meeting (AGM) as part of good governance.

Will KPMG be able to stay on to conclude its audit of Serba Dinamik’s financial accounts? 

How the government-linked shareholders, namely the Employee Provident Fund (EPF) and Kumpulan Wang Persarana (Diperbadankah)’s (KWAP), vote at the extraordinary general meeting on the matter will play an important role.

EPF is the third largest shareholder holding 10.157%, while KWAP holds a 5.263% stake. Collectively, the duo control roughly 15.42% stake. Meanwhile, State Financial Secretary Sarawak holds 4.11%.  

It is not known if the top management of Serba Dinamik already has a meeting with the two government-link entities to explain the audit issues that have put the company’s corporate governance and financial integrity at stake.

The issues flagged by KPMG are involved in several sales transactions, receivables and payables including its IT contract abroad. The total sum involved is more than RM3 billion. 

To recap, Serba Dinamik yesterday announced its non-independent non-executive director Datuk Abdul Kadier Sahib, who is also the second largest shareholder, has proposed to remove KPMG PLT as the company’s external auditor.

However, the announcement did not state Kadier’s rationale for the change of auditor. 

Holding a 15.96% stake in Serba Dinamik, Abdul Kadier has also proposed to appoint BDO PLT as the company’s new auditor “in place of KPMG PLT for the financial year ending June 30, 2021”.

The proposal to change auditor came two days after the oil and gas company dropped a bombshell announcing that it wants to conduct an independent review on the issues raised by KPMG during its statutory audit.  

When asked, the company’s single largest shareholder Datuk Dr Mohd Abdul Karim Abdullah at the virtual press conference today, whether he would also vote for the proposal to change the auditor, he replied that it was a decision he needed to make and it would be known at the EGM. 

Karim, who is also the managing director and CEO, controls 26.93% shareholding of Serba Dinamik. "We have not done anything wrong," he told the press conference today.

It only requires a simple majority to pass the resolution to change the auditor.  

Karim told the media that it was not appropriate for KPMG to raise the audit issues to the independent directors before the management simply because as the independent directors are not involved in day to day operations, they would not be of help to address the issues flagged.

Serba Dinamik’s board is chaired by Datuk Mohamed Nor Abu Bakar, who was formerly the chairman of Petronas’ Kerteh Integrated Petrochemical Complex up till 2007.

The company’s independent directors include KPMG Malaysia former partner Hasman Yusri Yusoff, Nationwide Express Holdings Bhd former managing director Rozilawati Basir, as well as accountant Sharifah Irina Syed Ahmad Razi and lawyer Tengku Datuk Seri Hasmuddin Tengku Othman.

MSWG highlighted that external auditors are appointed by shareholders to provide an independent opinion on whether a company’s financial statements present a true and fair view.

“Since the company is setting up a special independent review by appointing an independent firm to assess the veracity and accuracy of the matters brought up by the external auditor, the external auditor should be around to defend their findings and explain themselves.

“There is no urgency to remove the auditor at this juncture. As such, the MSWG urges all shareholders to vote against the resolution to remove the auditor,” it said.

Read also:
Serba Dinamik's second largest shareholder proposes removal of KPMG as auditor
KPMG raised audit issues on transactions involving over RM3 billion, says Serba Dinamik
MSWG urges Serba Dinamik minority shareholders to vote against removal of external auditor

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