Public Bank's CEO designate demonstrates how when skin matters, the pool is indeed limited-Part 2

The decision to appoint Quah Poh Keat as CEO should not be approved of by Bank Negara which has responsibility to depositors whose funds are the obvious, predominant source of  Public Bank's financing.
To begin with Quah has had no experience running a bank. His only qualification seems to be the fact that he is Chinese, and was the managing partner at Public Bank's auditor KPMG.
This alone should count against him, but the fact of his prior duties at KPMG raises questions about potential conflicts of interest. Indeed the conflict arose in 2008 when Quah was appointed a non-executive director and KPMG remained auditor.
Then , come questions concerning past audits. While Public Bank has been awarded a number of awards for best annual report and so on in Malaysia by the Malaysian audit and accounting fraternity, the fact is the Big 4 in Malaysia have been known and proven to be rather slack in their work.For example,as  one study found :

Audit quality can be defined as relating to the probability that financial statements contain no material omissions or misstatements.  The results of this study are alarming, finding systemic failure on the part of Big 4 auditors in Malaysia to comply with even the most basic elements of the FRS 136 disclosure framework in relation to goodwill impairment testing.


Indeed, Teh Hong Piow himself had difficulty explaining how this loss was accounted for, claiming that no one lost:








BERJAYA INDUSTRIAL DERIVATIVES CASE SETTLED OUT OF COURT.
By Ho Kay Tat.
313 words
14 October 1995
STBT
English
(c) 1995 Singapore Press Holdings Limited
ALL the parties involved in two separate legal suits filed over a US$14 million (S$20 million) derivatives trading loss suffered by Malaysia's Berjaya Industrial have settled the matter out of court, it was announced yesterday. Also embroiled in the dispute were Public Bank subsidiary Public Bank (Labuan), Credit Suisse Financial Products, CS First Boston (Singapore) and CS First Boston (Hongkong).
The other two parties in the settlement were Berjaya Corp (Cayman) and Yong Teck Ming, the former executive director of Berjaya Industrial who resigned for allegedly getting the company involved in the ill-fated derivatives deal without proper clearance.
The parties recognised that it was in their interest to avoid protracted litigation, Berjaya Industrial and Public Bank said in separate but similar statements.
All parties have, therefore, reached a mutually acceptable full and final settlement. All legal proceedings in the English and Malaysian courts have been withdrawn, they said.
The dispute began last December when Berjaya Industrial said it had suffered a loss of US$14 million from several interest-rate swap transactions entered into by its subsidiary Berjaya Corp (Cayman).
The shock disclosure prompted Bank Negara to issue guidelines to ensure that local banks traded prudently in derivatives.
In January, Public Bank (Labuan), which was the intermediary in the transactions, filed a suit in a London court against the two Berjaya units and Credit Suisse Financial Products for, among other things, breach of contract.
Berjaya Industrial and Berjaya Corp (Cayman) responded by starting legal proceedings in the Malaysian High Court on March 1 against Public Bank (Labuan), CS First Boston (Singapore), CS First Boston (Hongkong) and Credit Suisse, seeking damages of M$500 million (S$280 million).
Berjaya Industrial claimed the various transactions were not authorised by its directors and accused the defendants of negligence and misrepresentation.
Document stbt000020011104drae00259

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