Serba Dinamik MD's wealth shrinks over RM1b on paper after audit issues
KUALA LUMPUR (June 29): Serba Dinamik Holdings Bhd’s group managing director and chief executive officer Datuk Dr Mohd Abdul Karim Abdullah is sitting on estimated paper losses of RM1.5 billion, no thanks to the sharp fall in share price of the oil and gas engineering firm following the emergence of audit issues on May 25.
The cautious sentiment has spilled over to the two companies — KPower Bhd and Sarawak Consolidated Industries Bhd (SCIB) — in which Abdul Karim is also the substantial shareholder.
Abdul Karim controls a 27% stake in Serba Dinamik, a 32.36% stake in KPower, and 36.8% in SCIB.
While the three stocks have reversed the downward trend today following news that EY agreed to be Serba Dinamik’s independent reviewer but with conditions, still the share prices are substantially lower than what they were trading at before the audit issues were first made known on May 25.
Abdul Karim has some one billion shares in Serba Dinamik. His block of shares is valued at RM1.62 billion based on May 25’s closing price of RM1.61, versus RM341.38 million today based on the 34 sen trading price.
As a result, Abdul Karim is sitting on an estimated paper loss of RM1.28 billion in Serba Dinamik since May 25.
Abdul Karim is the chairman of the boards of KPower and SCIB. KPower is involved in energy and utilities, property development, logistics, healthcare and technologies, while SCIB is in concrete pipe and pile manufacturing, as well as industrialised building systems.
KPower’s share price has plummeted 60.36% from RM1.69 on May 25.
Abdul Karim’s stake in KPower was then valued at RM245.71 million based on the closing of RM1.69 on May 25. In contrast, his stake in KPower is worth lower at RM146.33 million based on the 67 sen at the time of writing. This translates into an estimated paper loss of RM99.38 million.
The share price of SCIB also lost ground, it tumbled 67.57% from RM1.48 over the past four weeks since May 25.
Abdul Karim's stake in SCIB was valued at RM267.22 million on May 25. With his stake now valued at RM86.67 million based on the 48 sen trading price today, he is sitting on a paper loss of RM180.55 million at SCIB.
The Serba Dinamik boss has been embroiled in an auditing dispute with KPMG, after its external auditor highlighted discrepancies involving transactions to the tune of RM4.54 billion.
Abdul Karim has reiterated several times that the management of Serba Dinamik has done “nothing wrong” in regards to the audit issue flagged by KPMG.
He claimed that KPMG did not handle the audit issues in an appropriate manner by raising the matter to the independent directors then. He believes that the auditor should have their queries addressed by the management to resolve issues.
Consequently, the company hired top lawyer Tan Sri Muhammad Shafee Abdullah to file a lawsuit against KPMG for alleged negligence. Soon after, KPMG resigned and cited that it was unable to independently continue to discharge its duty as the reason. Five independent directors stepped down after the lawsuit was filed.
Bursa Malaysia has set the deadline for Serba Dinamik to appoint an independent reviewer by Friday to address the issues raised by KPMG.
EY has accepted the offer to be the independent auditor with additional conditions.
EY required a written confirmation from Serba Dinamik’s former auditor KPMG that cooperation in the form of access and information will be provided to EY for the purpose of understanding the alleged irregularities and anomalies identified, such as the confirmation process of matters sent to identified customers; and the relevant work papers including confirmations and correspondences in relation to the findings and concerns raised.
Serba Dinamik is currently awaiting a response from KPMG on EY’s request.