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SERBADK (5279): SERBA DINAMIK HOLDINGS BHD plunges 10% following news of KPMG's resignation as external auditor

KUALA LUMPUR (June 24): Shares in Serba Dinamik Holdings Bhd continued their downward spiral, following news that KPMG PLT had resigned as the group's external auditor with immediate effect.

As at market close, Serba Dinamik's share price fell six sen or 10.08% to 53.5 sen, valuing the company at RM1.99 billion.

The counter saw 371.67 million shares traded, making it the most active stock on Bursa Malaysia.

Since the audit issues of the firm were made public at the end of May, the counter has lost about 70%, with over RM3 billion in market capitalisation wiped off.

Meanwhile, counters linked to Serba Dinamik group managing director and chief executive officer Datuk Dr Mohd Abdul Karim Abdullah also felt the heat — both KPower Bhd and Sarawak Consolidated Industries Bhd (SCIB) were also in the red.

KPower slid 10.5 sen or 10.77% to 87 sen, while SCIB was down six sen or 8% to 69 sen.

Mohd Abdul Karim, who is the largest shareholder of Serba Dinamik, controls a 27.07% stake in the oil and gas firm. He also holds a 32.36% stake in KPower and 36.8% in SCIB.

In a filing with the bourse, Serba Dinamik announced KPMG's resignation, with KPMG citing its inability to independently continue the audit engagement and discharge its professional duties as auditor of the company.

Serba Dinamik has been embroiled in an auditing dispute with KPMG, after its external auditor highlighted discrepancies involving transactions to the tune of RM4.54 billion to the company's independent directors last month.

The issues raised were based on the financial accounts for the financial year ended Dec 31, 2020.

Subsequently, Serba Dinamik called for a press conference to announce that its board had decided to take legal action against KPMG, alleging that the external auditor had been negligent and breached its contractual and statutory duties to the group.

Serba Dinamik's legal consultant Tan Sri Muhammad Shafee Abdullah claimed that KPMG had raised the red flags in an inappropriate manner.

Meanwhile, the group's newly appointed chairman, Datuk Mohamed Ilyas Pakeer Mohamed, claimed that the external auditor "has blown the audit issues out of proportion".

He also claimed that he had spoken to the Securities Commission Malaysia (SC) and Bursa regarding the matter, although both regulators have since denied they had spoken to Mohamed Ilyas.

The SC also said that auditors are required by law to report to the commission if they find any material issues, or if there are any potential breach of securities laws and rules of the stock exchange.

"Auditors should be allowed to carry out their responsibilities and render their independent opinion without fear or favour, and discharge their duties free from any retaliation," it said yesterday.

In a separate statement, Bursa Malaysia also reiterated that it is "imperative" that Serba Dinamik appoints an independent reviewer to address the uncertainty and provide clarity to the market.

In response to queries from theedgemarkets.com, KPMG said the suit had no legal basis and it would firmly refute the allegations if the matter goes to court.

"The potential claim relates to a statutory audit that is still in progress and we are unable to make any comments. The audit is being conducted in accordance with the relevant professional standards.

"We see no basis for it and will vigorously contest any court proceedings," it said.

http://www.theedgemarkets.com/article/serba-dinamik-plunges-10-following-news-kpmgs-resignation-external-auditor

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