In june 2021, Ernst & Young Consulting Sdn Bhd (EY) was appointed by Serba Dinamik to conduct a special independent review into their company.
The events that led to their appointment started in May 2021, when the external auditor KPMG notified Serba Dinamik's board and the Securities Commission Malaysia (SC) under Section 320 of the Capital Markets and Services Act 2007 concerning unresolved audit discrepancies involving 11 customers and over RM3 billion in transactions.
Within the same month in May 2021, SC raided Serba Dinamik offices to seize accounting documents and evidence following KPMG's statutory notice.
Then in early June 2021, Serba Dinamik disputed the severity of the findings, calling them trivial, and filed a legal suit against KPMG, claiming negligence.]
In the same month, June 2021, KPMG tendered their resignation as Serba Dinamik's external auditor, stating that the lawsuit compromised its ability to independently continue the statutory audit.
During the same period, June 2021, Bursa Malaysia issued a formal directive under paragraphs 2.23 and 2.24 of the Main Market Listing Requirements instructing Serba Dinamik to appoint an independent international accounting firm to carry out a special independent review (SIR).
In the following month, July 2021, Serba Dinamik formally appointed EY Consulting as the special independent reviewer to assess the veracity of the financial issues raised
In Nov 2021, SC issued a statement which states amongst others, the following, reproduced ad verbatim,
`The SC conducted a raid on 18 May 2021 to secure documents and relevant evidence from several Serba Dinamik offices following a section 320 Capital Markets and Services Act 2007 (CMSA) notice issued to the SC by KPMG.
In the course of its investigation, the SC received and granted a request from EY to have access to documents and evidence seized by the SC during the raid as EY was having difficulties obtaining complete documentation from Serba Dinamik on several aspects of its review. The SC subsequently issued a section 152 Securities Commission Malaysia Act 1993 (SCMA) notice to require EY to disclose its SIR findings for the SC’s review’.
According to a report by a business weekly in April 2022, subsequent to the raid, SC carted away 60 boxes of documents from Menara Serba Dinamik in Section 14, Shah Alam, in Selangor.
SC apparently found 59 company and personal stamps of external parties in a box, according to court documents.
Where is the conundrum?
That SC found company chops and stamps of other companies used to make fake invoices lying around the office.
Is the management that careless as to leave all these `tools’ that they used to falsify the invoices in the offices?
The transaction values reportedly flagged by the auditors are in the hundreds of millions to billions.
To falsify invoices for these types of quantums required more than just a few months or one financial year.
This act of alleged falsification appears to have been going on for more than one financial year for it to reach the alleged quantums `bandied' about publicly by the authorities.
How can the management of Serba Dinamik be so brazen as to doing the falsification exercise in the office and then leave the `tools’ required for the falsification in the same office and to be taken away by the authorities during the raid?
This could probably mean they have been doing the falsification for years and in the open in their OWN OFFICE and no one, including `outsiders’, found it unusual and queried them, which explains why they did not take the usual steps of hiding everything.
Compare this with Bernie Madoff’s Ponzi scheme.
Following his arrest in December 2008, the investigation extended beyond his primary headquarters in New York to a secure warehouse located in another area of New York where investigators discovered the massive rows of boxes and filing cabinets stuffed with older financial documents, fake trade confirmations, and client statements.
Madoff’s primary outside accountant and auditor, David G. Friehling of the firm Friehling & Horowitz admitted that instead of performing legitimate, independent audits according to professional standards, he simply "rubber-stamped" Madoff's regulatory filings for nearly two decades.
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