Audit team ‘shocked’ over suggestions to change 1MDB report, recalls NAD director

KUALA LUMPUR, Nov 21 — Federal auditors were “shocked” over suggestions made by senior government officials and 1Malaysia Development Berhad (1MDB) then CEO Arul Kanda Kandasamy in 2016 to change the findings of the fund’s final audit report, an audit team member told the High Court today.

Testifying against Datuk Seri Najib Razak in the latter’s joint trial with Arul Kanda for their alleged role in tampering the 1MDB final audit report, Nor Salwani Muhammad said she and the other audit team members learnt of the “shocking” changes from an audio recording of the high-level meeting held on February 24, 2016.

The 2016 meeting among stakeholders had taken place at the office of the then Chief Secretary to the Government Tan Sri Ali Hamsa, where decisions were made to remove or change certain parts of the audit report, including omitting the existence of 1MBD’s two conflicting financial statements for 2014.

Salwani, who is now a director at the National Audit Department (NAD), was in 2016 the coordinator for the department’s special audit team that was tasked to inspect 1MDB’s financial health.

Earlier today, Salwani had revealed during examination-in-chief by Datuk Seri Gopal Sri Ram that she had left an audio recording device in the meeting room as an alternative means to record minutes, as she was asked to leave the meeting before it had started.

Sri Ram: After you listened to the recording, what did you do?

Salwani: We were shocked to hear what had happened in the meeting. I then copied the recording to a hard disk belonging to the audit team.

Sri Ram: Why were you shocked?

Salwani: [I was shocked] with what happened. When we heard what was reported in the national audit report was asked to be reconsidered or dropped including the two financial statements not to be included in the report ... and this report was asked to be destroyed.

Sri Ram: In your 18 years of service how many exit conferences have you attended?

Salwani: More than a hundred, perhaps 20 to 30 per year.  

Sri Ram: Have you ever in your career in your experience had an event such as this that occurred on February 24?

Salwani: Never, that is why we were shocked when we heard the recording after the meeting on the 24th of February.

Sri Ram: In terms of normalcy how would you describe this event, normal or abnormal?

Salwani: Abnormal.

Salwani also told Sri Ram that the NAD typically only holds one exit conference for each audit that it carries out.

An exit conference is part of the typical audit process where those being audited are given the chance to provide feedback or responses to the findings by the auditors.

Before the February 24, 2016 meeting, NAD had already conducted an exit conference with 1MDB on December 16, 2015, as per standard operating procedure, after completing their audit, Salwani confirmed.

When asked by Arul Kanda’s lawyer Datuk N. Sivananthan, Salwani confirmed that the then 1MDB CEO had in the December 2015 exit conference already spoken about the 1MBD’s two conflicting financial statement for 2014.

Sivananthan highlighted that NAD’s draft of the final 1MDB audit report had around 350 pages when it was prepared in February 2016, compared to the 250 pages that were given to 1MDB when NAD had its first exit conference with the fund on December 2015.

Salwani then explained that the additional 100 pages were related to SRC International which was no longer an entity under 1MDB at the time.

Sivananthan then asked whether NAD had held another exit conference with 1MDB on the additional 100 pages, for which she said no.