SERBA Dinamik Holdings Bhd is taking its impasse with external auditors KPMG PLT with regard to the completion of the company’s statutory audit for FY2020 a step further – to file a civil claim for substantial damages inflicted on its share price and market capitalisation.
Among others, the claims will be made on the grounds of professional negligence, breach of contract and breach of statutory duty, according to the company’s newly-appointed chairman Datuk Mohamed Ilyas Pakeer Mohamed.
“Serba Dinamik contends that the findings raised by KPMG were not substantive in nature that warrants an independent review,” he told a media conference in Shah Alam. Also present were Serba Dinamik’s group managing director and CEO Datuk Dr Mohd Abdul Karim Abdullah and solicitor Tan Sri Muhammad Shafee Abdullah.
“In fact, the issues faced by KPMG are entirely attributable to their own negligence, among other breaches, in the course of the audit process which forms the subject matter of the civil suit based on the above-cited grounds.”
As to why Serba Dianmik chose to pursue a legal path instead of awaiting the findings of its recently-awaited independent reviewer Ernst & Young Advisory Services Sdn Bhd (EY), Mohamed Ilyas described KPMG as “a shop lot auditor who behaves likes God and gangster”.
“KPMG’s negligence has resulted in more than RM3 bil of Serba Dinamik’s market capitalisation being wiped out (over the past two weeks),” he lamented. “I will personally speak to the Government to take action against KPMG for pinning down a reputable Bumiputera company.’
Muhammad Shafee contended that having consulted the board of the global integrated oil & gas (O&G) service provider – and having studied the impending issues from all angles – he derived at the conclusion that KPMG has not behaved professionally in executing its duty.
“The company has strong case and strong probability of success … as to the question why didn’t Serba Dinamik work with KPMG to resolve the issue from the outset, the question should be addressed to KMPG as to why it chose to remain silent over the past 50 days but instead insisting on appointing an independent reviewer.”
Given the severity of the damage, the quantum of the legal suit “wouldn’t be small but astronomical”, according to Muhammad Shafee.
“It’s difficult to ascertain at this juncture but first and foremost, RM3.7 bil in market capitalisation has been eroded not to mention total loss of confidence in addition to wanting to seek punitive damages for negligence which cannot be easily computed.”
As to why the legal suit “has superseded” the EY report, Muhammad Shafee contended that KPMG has erred all along in its auditing process.
“As a result, the company (Serba Dinamik) has taken a big hit for something which is not its fault. There is a dire need to seek justice for the company whose reputation has been dragged down (so low),” he pointed out.
“If KPMG doesn’t resign given that the present relationship is no longer tenable, then shareholders can moot an EGM (extraordinary general meeting) to remove the auditor by seeking an alternative among the Big-Four firms”.
Abdul Karim who is looking forward to put the matter to rest after a traumatic three weeks said by putting the case before the court, he will be able to clarify the whole issue openly and freely while enabling the operations of Serba Dinamik to return to BAU (business as usual).
While insisting that the decision with regard to the formation of independent committee is status quo, the founder of Serba Dinamik reiterated that his company remains fundamentally sound with viable businesses and a global reach.
“I’ve been in constant touch with many of our overseas business partners and investors of whom many are keeping their faith in us and regard the issues being brought up by KPMG as petty.”
Abdul Karim also defended Serba Dinamik’s decision to appoint three new independent directors as a necessity in view of the current development surrounding the company.
“We cannot afford to have independent directors who sit in the room without talking to our substantial shareholders; in short, we want more action-oriented INED with relevant qualification and know-to help the company to surf through the difficult time.”
At the close of today’s trading, Serba Dinamik was up 2.5 sen or 4.17% to 62.5 sen with 576.23 million shares traded, thus valuing the company at RM2.33 bil. – June 22, 2021