KUALA LUMPUR (April 20): KPMG, the auditor for 1Malaysia Development Bhd’s (1MDB) 2013 accounts, was “adamant” that it should meet former prime minister Datuk Seri Najib Razak before signing off on its audit of 1MDB's financial statements for that year, former 1MDB chief financial officer (CFO) Azmi Tahir said.
He was testifying on Wednesday (April 20) in the 1MDB-Tanore trial that the meeting on Dec 15, 2013 at Najib’s Langgak Duta residence here was because KPMG had told him that the audit firm would sign off on the 2013 accounts after it met with Najib.
During that time, Azmi said, KPMG had refused to sign off on its audit of the strategic development company because it was dissatisfied with the inadequate explanations and documents provided in relation to 1MDB’s huge overseas investment of US$2.3 billion in an unknown fund, Bridge Global SPC, that was made through Brazen Sky Ltd — a special purpose vehicle of 1MDB.
Frustrated at the lack of progress, KPMG had sought a meeting with the shareholder of 1MDB — in this instance, the Ministry of Finance Inc, which was represented by Najib as the then prime minister and finance minister. However, the meeting was not minuted as it was supposed to be informal.
Under cross-examination from Najib’s lawyer Wan Aizuddin Wan Mohammed, Azmi said he was “surprised” that KPMG had requested the meeting with Najib as he and the management of 1MDB had given the auditor whatever information that was within its control.
“We tried as much as possible to give KPMG information and address issues, it came to a point where they (KPMG) said that they wanted to meet the shareholder if not they would not sign off. Bottom line was that they wouldn’t sign off [on the 2013 accounts] if they didn’t meet [with Najib],” he said.
“They were adamant to meet the prime minister,” he added.
He said they were still trying to get information for KPMG about 1MDB when KPMG partner Ahmad Nasri Abdul Wahab had requested a meeting with Najib.
“I was surprised (that they requested the meeting), it was along the lines of… What’s the purpose? They wanted to check with the prime minister and they said if the prime minister says yes, they will sign off on the audit,” he said.
Upon receiving this information, Azmi said he had briefed Malaysian financier Low Taek Jho, better known as Jho Low, about KPMG’s request, which Azmi said was like an “ultimatum”.
Wan Aizuddin: [They said] if the PM says yes, they will sign off?
Azmi: Yes. I conveyed this to Jho Low. He (Low) also asked after the meeting what [will happen]? I was pressured by Jho Low, 'Sure ah? Sure ah, (they will sign off) after the meeting'.
Wan Aizuddin: Upon the request (by KPMG) the first person you contacted was Jho Low?
Azmi: Yes, just to update him... Generally, problems or issues especially regarding the prime minister, [we didn't deal with the] Prime Minister’s Office because [we thought Jho Low was the representative of the PM].
The said meeting with KPMG at Najib’s residence was attended by the audit firm’s managing partner Datuk Johan Idris. On the 1MDB side, Azmi along with former 1MDB CEO Mohd Hazem Abdul Rahman and then 1MDB chairman Tan Sri Lodin Wok Kamaruddin were in attendance together with Jho Low and Najib.
Wan Aizuddin then asked why he had contacted Jho Low and not Najib's principal private secretary Datuk Azlin Alias about the meeting with the prime minister.
In his witness statement, Azmi said he joined 1MDB as CFO on June 1, 2012 and that he had been contacted by Azlin for the job.
He maintained he had heard of Jho Low as Najib's adviser through Azlin and that he subsequently met Jho Low at his office at KLCC as arranged by Azlin prior to him taking on the CFO position in 2012.
Wan Aizuddin: You got the very best link to the prime minister through his principal private secretary.
Azlin: Some things yes, but mostly Jho Low was playing major roles in 1MDB… I updated Jho Low because he was handling the audit… I could have [gone to Azlin] but I didn’t.
It was also previously testified by Hazem that former BSI Bank Singapore managing director Yak Yew Chee, who was present at Najib’s house, then joined the meeting after the initial discussions between Najib and the 1MDB officers.
Yak was sentenced to 18 weeks' jail after pleading guilty to four criminal charges before a Singaporean court for forgery and failure to flag suspicious transactions in the investigations related to 1MDB in 2016. Yak, 57, was the relationship manager of Jho Low, and the banker in charge of the 1MDB account for Swiss bank BSI.
Yak was reportedly the first banker to be convicted in the global corruption and money laundering probes surrounding 1MDB.
It was previously reported that before the meeting with KPMG, Jho Low had sent him an email which stated how Najib should act at the meeting, underlining that Najib “should not talk too much” at the meeting.
The strategy outlined points for Najib, including expressing his confidence in the credentials of BSI Bank in Switzerland, which was acting as the fund manager of 1MDB’s purported US$2.3 billion investment.
Azmi previously testified that when he arrived at Najib’s house, he had observed that Najib already had with him a copy of Jho Low’s email.
“The topics outlined in the email were discussed between Najib and Idris,” he said, adding that Najib had stuck to the email directions.
Azmi then testified that in the meeting, Johan had asked Najib if he had known about Bridge Global and Brazen Sky, to which Najib replied that he knew about the investments.
“Najib then asked Johan why he was suspicious over the underlying assets of the investments when BSI themselves had given a statement of the investments,” he said.
“Najib told Johan that he wished to see KPMG close the audit report for 1MDB’s financial statements before Dec 31, 2013,” he added.
Najib has been charged with four counts of abuse of power to enrich himself with RM2.3 billion from 1MDB, and 21 counts of money laundering for the same amount. He faces up to 20 years' imprisonment if convicted.
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