Oilcorp denies hiding documents from auditors

OILCORP Bhd has denied that it hid certain documents from its auditors and said that Baker Tilly Monteiro Heng (BTMH) only questioned the validity of a contract after it carried out its audit.

In fact, Oilcorp claimed that it issued the 2007 audited accounts, containing a disclaimer, because BTMH promised to clear the matter within a week.

Yesterday, Oilcorp provided a seven-page reply to BTMH's statement issued on July 16. The company will hold a shareholders meeting on Monday to remove BTMH and appoint Horwath in its place.

BTMH had said that it suggested an independent probe over the contract. It even claimed that certain documents were kept from its knowledge.

"The suggestion by BTMH via their letter dated 8th of May, 2008 on an investigative review on the project to determine both the validity of the project and reasonableness of the accounting treatment was not taken up by the company because these issues were never raised to the management, the directors or the audit committee during the course of audit prior to the (audited account) signing on the 30th of April, 2008," Oilcorp said.

It is believed that the reason why BTMH only suggested a probe into the contract in question in early May was because further reviews have raised more issues and more contradicting documents.

But Oilcorp said BTMH was prepared to give its audited accounts a clean bill of health on April 29 2008, a day before the submission deadline. This was provided Oilcorp could give it a letter from a client that the contract was indeed worth RM110 million.

However, BTMH refused to accept and recognise the letter the next day.

The highly-publicised fallout surfaced in May this year. Initially, Oilcorp announced that it may have to amend its 2007 annual audited accounts because it couldn't agree with its auditors on the value of a contract to build a biofuel plant.

Another accounting firm, Messrs Horwath, was later hired by Oilcorp to carry out a special audit on the disputed contract, the result of which was favourable to Oilcorp.

The report produced by Horwath, however, was just an "independent verification review", BTMH argued. Hence, it could not change its view on Oilcorp's account merely based on Horwath's report.

"A verification review is not an audit, or an investigation. It's a lower level type of check," Minority Shareholder Watchdog Group chief executive officer Abdul Wahab Jaafar Sidek told Business Times.

"If Oilcorp were to appoint a third party to give an independent opinion, they should do a full audit," Wahab said.