Deloitte fined £409,000 by Malaysian authorities over bond issue irregularities

Malaysia's securities commission says Deloitte made "serious" breaches in failing to flag bond issue irregularities of its client.

Image:Deloitte is accused of failing to discharge its statutory obligations

Deloitte has been fined RM2.2m (£409,000) by Malaysian authorities over a state investment fund embroiled in corruption charges.

The global professional services giant is being censured by Securities Commission (SC) Malaysia for four breaches, in its role as an auditor for the state investment fund 1Malaysia Development Berhad (1MDB) during the 2015 and 2016 financial years.

According to the commission, Deloitte was the statutory auditor for 1MDB's real estate unit 1MDB Real Estate Sdn Bhd and its 486-acre mixed use Bandar Malaysia development (BSMB).

Bandar Malaysia launched a RM2.4bn (£446m) Islamic Bond issue in 2014, which the SC says contained irregularities "which may have a material effect on the ability of BMSB to fulfil its obligations" in repaying bondholders - which Deloitte neglected to report.

"The SC finds the breaches committed by Deloitte serious in nature, as it has failed to discharge its statutory obligations," the watchdog said in a statement on Wednesday.

A representative for Deloitte couldn't be reached for comment.

State investment fund 1MDB is currently embroiled in a wide-ranging corruption scandal that has linked Malaysian politicians and Hollywood royalty.

Former Malaysian prime minister Najib Razak was arrested in July last year, accused of embezzling government money

Image:Malaysia's ex-prime minister Najib Razak arrives in court in Kuala Lumpur in July 2018

He is at the centre of a probe into billions of dollars missing from 1MDB, which was set up in 2009 after he became head of his country's government.

Najib's stepson Riza Aziz, an aspiring film producer, is also alleged to have used tens of millions of dollars from the fund to finance the Hollywood films The Wolf Of Wall Street, which starred Leonardo DiCaprio, Dumb and Dumber To and Will Ferrell film Daddy's Home.

1MDB first came to the attention of authorities in 2014 when it slid $11bn into debt.

In July 2015, the Wall Street Journal published documents showing Najib received at least $681m in payments to his personal bank accounts.

The US justice department filed lawsuits to seize some $1.7bn in assets it said were purchased with money stolen from 1MDB.

US authorities allege that a total of more than $4.5bn was stolen from 1MDB by high-level officials and their associates between 2009 and 2015.