Two of the largest institutional investors in Malaysia’s oil‑and‑gas services firm Serba Dinamik have publicly expressed unease after KPMG’s audit flagged contracts and transactions totalling RM3.5 billion with eleven customers that the auditor could not confirm. While the company has rejected the audit’s conclusions, the statements from its shareholders add a new dimension to the dispute. Permodalan Nasional Berhad (PNB), the country’s biggest fund manager and Serba Dinamik’s fifth‑largest shareholder, sent a direct email to Reuters on 2 June.
In the message the fund said it had communicated “deep concern about recent developments” to the board and warned that there was “no benefit in removing the appointed auditor before the annual audit is finished.” PNB also reserved the right to vote against any resolution that would retain KPMG as auditor, signalling a willingness to oppose the board’s choices. The Employees Provident Fund (EPF), the pension fund that ranks as the company’s third‑largest shareholder, issued a parallel statement.
EPF called for “the highest level of transparency and corporate governance” from companies in its portfolio. Although the fund stopped short of outlining specific actions, its public admonition is notable given its stewardship of billions of ringgit in retirement savings. The audit concerns first surfaced on 1 June 2021, when Serba Dinamik disclosed that KPMG could not verify the RM3.5 billion of contracts and related transactions.
The firm immediately rejected the auditor’s findings, maintaining that the contracts were valid and that no irregularities existed. In response, Malaysia’s Securities Commission launched a regulatory investigation, creating a parallel track to the shareholders’ financial scrutiny.
Complicating matters, the company’s second‑largest shareholder had earlier proposed removing KPMG as auditor. That proposal was withdrawn on 2 June, the same day PNB and EPF released their statements. Serba Dinamik confirmed the withdrawal in a brief note but did not identify the shareholder or explain the reversal.
The timing suggests the withdrawal may have been influenced by the heightened pressure from PNB and EPF. Serba Dinamik has pledged to engage an independent firm to review the disputed contracts, describing the upcoming review as “unbiased.” The commitment aims to address procedural concerns while the broader audit issue remains unresolved.
However, PNB’s explicit threat to vote against retaining KPMG indicates that the board could face a contested vote should it attempt to keep the current auditor or replace it with a firm that does not satisfy the shareholders. The core factual dispute centres on the RM3.5 billion in contracts that KPMG could not substantiate. For a service provider whose revenue depends heavily on contract execution, the distinction between a procedural audit disagreement and a substantive contractual problem is critical.
The shareholders have not taken a position on the existence of the contracts themselves; instead, they are focused on ensuring a transparent audit process and robust governance. As the Securities Commission proceeds with its investigation and Serba Dinamik prepares its independent review, the company now contends with three simultaneous pressures: regulatory scrutiny, the public statements of two major institutional investors, and an internal debate over its auditing arrangements.
How the board navigates these challenges will determine whether the shareholders’ concerns remain a warning or evolve into decisive action.
