KUALA LUMPUR (Jan 28): Malaysia's securities regulator said on Saturday (Jan 26) it was looking into

the conduct of auditors of 1Malaysia Development Bhd (1MDB), a state fund that was wound up
after losing billions of dollars in a scandal that erupted under the country's previous government.

"The Securities Commission's review of the conduct of auditors in relation to 1MDB audits is still on-
going," the regulator said in an emailed statement to Reuters, without identifying the firms involved.
The statement was issued following a South China Morning Post report on Friday that cited sources
saying that the regulator was reviewing the work carried out by international auditors KPMG and
Deloitte to see if they were "were aiding and abetting in this scandal, or merely negligent."

KPMG and Deloitte did not respond to requests from Reuters for comment. Once the review is
completed, the Securities Commission and its Audit Oversight Board "will assess the findings and
consider the appropriate next course of action," the regulator said. 1MDB is the subject of money
laundering investigations in at least six countries, including the United States and Malaysia. The US
Department of Justice has alleged that over US$4.5 billion was stolen from 1MDB by top officials of
the fund and their associates between 2009 and 2014. Deloitte audited 1MDB's financial statements
for 2013 and 2014, before it resigned as the fund's auditor in early 2016. It had taken over after
1MDB fired its earlier auditors, KPMG and Ernst & Young, authorities have said.

After the Justice Department filed civil lawsuits in 2016 over 1MDB, Deloitte said the 1MDB finance
statements it had audited should no longer be relied upon. In June last year, 1MDB said KPMG had
informed the fund that 1MDB's financial statements for the financial years ending March 2010, 2011
and 2012 audited by KPMG did not provide a true and fair assessment of the company.

Investigations into 1MDB were reopened in Malaysia after Prime Minister Tun Dr Mahathir
Mohamad unexpectedly won a general election in May. The 1MDB scandal was a major reason for
former premier Datuk Seri Najib Razak's shock election loss. Najib has since been charged with graft
over 1MDB, the fund he founded in 2009. He has pleaded not guilty and has denied any wrongdoing.
Goldman Sachs, which helped sell 1MDB bonds, is also facing criminal charges in Malaysia.