Kuala Lumpur: A senior auditor from KPMG told the High Court in Datuk Seri Najib Razak’s 1MDB corruption trial the former prime minister “ordered” him to sign off on the company’s 2013 financial statement.
KPMG’s managing partner, Johan Idris, said Najib wanted the company’s auditor to close the accounts before Dec 31, 2013.
“His remarks were akin to an order,” he said, when asked by deputy public prosecutor Deepa Nair Thevaharan.
KPMG had questioned 1MDB’s US$2.3 billion investment in Brazen Sky Ltd as it could not verify the authenticity of the investment. It also refused to sign off on the 2013 financial statement.
“1MDB had furnished reports from BSI Bank on the Brazen Sky investment, but they were not sufficient for us to come out with an audit report to say that its financial statement was of ‘true and fair view’.
“We wanted more information on the underlying assets in Brazen Sky because the investment was in the form of units,” he said.
Johan also said he was one of the representatives from KPMG to meet 1MDB officials on Nov 29, 2013 to discuss Brazen Sky.
“(1MDB) chairman Che Lodin Wok Kamaruddin asked why we could not rely on BSI’s reports on Brazen Sky.
“Ahmad Nasri Abdul Wahab, who was the head of our engagement team, told the chairman that as auditors, we could not merely rely on third party information and that we needed to gather evidence about the ‘existence, accuracy, completeness and valuation’ on Brazen Sky,” he said.
He said then 1MDB CEO Hazem Abdul Rahman informed the meeting that BSI banker Yak Yew Chee had previously met Najib to explain the Brazen Sky investment.
“We requested 1MDB to arrange a meeting with the prime minister so that we could hear from him on whether he was aware about the investment,” he said.
Johan said he and two other KPMG partners – Raslan Abdul Rahman and Foong Mun Kong – went to meet Najib at his Langgak Duta house on Dec 15, 2013.
However, only he was allowed to enter the house. Raslan and Foong had to wait outside.
“At the meeting, the prime minister said he was aware of the Brazen Sky investment but 1MDB could not disclose further information because it was confidential.
“He (Najib) also questioned why KPMG was doubtful over the underlying assets,” he said. He said he told Najib that “we (auditors) need evidence to complete the audit process, as required under the law”.
“If we cannot complete the audit process we will issue a ‘disclaimer of opinion’ against 1MDB.”
He said Najib mentioned he wished to see the 1MDB accounts closed by Dec 31, 2013.
“I did not respond to him on the spot,” he said.
Johan said KPMG was unable to complete the audit since 1MDB had failed to furnish information on Brazen Sky despite repeated requests.
“Subsequently, we received a letter from the Minister of Finance Inc (MoF Inc) informing us that our services had been terminated with immediate effect.
“In the letter, we were told that Deloitte would be taking over from us,” he said.
Najib is standing trial on 25 charges of abuse of power and money laundering over alleged 1MDB funds amounting to RM2.28 billion deposited into his AmBank accounts between February 2011 and December 2014.
