Ex-1MDB CFO: KPMG said would sign off on 2013 audit if then-PM Najib said OK; Jho Low asked me: 'Sure ah, sure ah'

KUALA LUMPUR, April 20 — Audit firm KPMG was adamant about meeting then prime minister Datuk Seri Najib Razak in 2013 to resolve the auditors’ concerns about 1Malaysia Development Berhad’s (1MDB) purported overseas investment of US$2.318 billion and the lack of sufficient information about the investment, 1MDB’s former chief financial officer Azmi Tahir said today.

1MDB’s audited financial statement for the financial year ending March 31, 2013 would normally be signed off by its auditors within six months or by September 2013, but this was delayed as KPMG was still seeking for information from 1MDB about the alleged investment.

With KPMG refusing to sign off on 1MDB’s financial statement for the year ending March 31, 2013 as it was still dissatisfied with information being provided, Azmi said that the auditors eventually asked to meet Najib.

Azmi said this while testifying as the 12th prosecution witness in the trial against Najib over the misappropriation of over RM2 billion of 1MDB funds.

Today, Azmi testified about a December 15, 2013 meeting between KPMG and 1MDB held at Najib’s house, confirming that this meeting was held at KPMG’s request.

Azmi said that he had received a phone call from either KPMG’s Ahmad Nasri Abdul Wahab or Datuk Johan Idris where the request was made, after the auditors remained unhappy with the information that 1MDB had provided so far.

Najib’s lawyer Wan Aizuddin Wan Mohammed then asked what was Azmi’s reaction when he received this request from KPMG to meet with the prime minister.

“I was surprised — have to meet the PM — so I said why? It was along the lines, as in why? What’s the purpose? They wanted to appreciate from the shareholder that everything is OK.

“I said, ‘then what?’ They said, ‘If PM accepts, then we sign off’,” Azmi said.

Wan Aizuddin: You said they said, ‘If PM said yes, they will sign off’?

Azmi: Because I communicated the message to Jho Low, so again Jho Low was also saying, why, why meet PM, why can’t accept this info? So he asked me the same thing. So I said, they said if they met and satisfactory and PM knows and it’s OK, they will sign off. I was pressured by Jho Low, ‘Sure ah, sure ah, they will sign off’.

At that time, Najib as the finance minister also represented 1MDB’s sole shareholder MOF Inc by signing off on shareholder resolutions for 1MDB, while Low Taek Jho — better known as Jho Low and now a fugitive — was viewed by Azmi and other prosecution witnesses in this case as Najib’s representative for 1MDB matters.

Previously on November 28, 2013, Low had been the one who sent information in an email to 1MDB senior management about the 1MDB audit. — Picture via Facebook

Wan Aizuddin then questioned why the first person that Azmi had contacted — regarding the KPMG request to meet the prime minister — was Low.

Azmi then said it was to update Low, explaining: “Generally we update him, that’s what we are supposed to do, problems, issues, especially dealing with PM or anything, none of us dealt directly with PMO (Prime Minister’s Office) in this sense, because we believe he was the representative.”

Wan Aizuddin pointed out that Azmi’s friend Datuk Azlin Alias --- then the principal private secretary to Najib ---- would be the best link to the prime minister, but Azmi explained that he had chose to update Low instead of Azlin based on the subject matter.

“Yes, so sometimes I did deal with Datuk Azlin, but not all things, Jho Low was playing the major role,” he said, pointing out that the issue of having 1MDB’s audit completed and signed off was something that Low was handling and that this was why he updated Low.

As Wan Aizuddin insisted that Azlin’s position meant he would be the one who could better organise a meeting with the prime minister as requested by KPMG, Azmi explained: “Yes, but in this case, I updated Low because he was handling this audit, it’s as simple as that, I could have, but I didn’t.”

Previously on November 28, 2013, Low had also been the one who sent information in an email to 1MDB senior management about the 1MDB audit.

Low was also the one who had sent an email on December 15, 2013 to detail the strategy for Najib’s meeting with KPMG on the same day, including instructing the prime minister not to talk too much with the auditors.

At the December 15, 2013 meeting, Najib had expressed his desire to KPMG for the 1MDB account audit to be completed by December 31, 2013.

As KPMG did not close its audit of 1MDB’s 2013 financials due to continued dissatisfaction with the documents and answers provided on the US$2.318 billion investment and with 1MDB under pressure to have the audit report closed, 1MDB on December 31, 2013 then decided to terminate KPMG as its auditor and to replace it with auditor Deloitte KassimChan.

Former 1MDB CEO Mohd Hazem Abd Rahman had as the 10th prosecution witness explained that he had proposed for KPMG to be removed as 1MDB’s auditor after it refused to sign off on the 2013 financial statements amid insufficient information, stating: “Well, basically KPMG did not want to close it, and (I was) being pressured by the prime minister directly to find a way to solve this, and the only way to solve this is to replace with a new auditor.”

The alleged investment by 1MDB — via six promissory notes claimed to be worth US$2.3 billion but now known to be worthless pieces of paper — were “invested” through 1MDB’s special purpose vehicle Brazen Sky Limited in the purported Cayman Island-based hedge fund Bridge Global Absolute Return Fund SPC, with the Singapore branch of Swiss bank BSI Bank acting as the “fund manager” of the purported investment. This is now said to be a sham investment.

The trial before High Court judge Datuk Collin Lawrence Sequerah resumes tomorrow.