.JPG "Datuk Seri Najib Razak arrives at the Kuala Lumpur High Court April 20, 2022. u00e2u20acu201d Picture by Hari Anggarann")
KUALA LUMPUR, May 10 — There was “intimidation” from former finance minister Datuk Seri Najib Razak to have KPMG sign off on the audit report for 1Malaysia Development Berhad’s (1MDB) 2013 financial statement, the audit firm’s managing partner told the High Court today.
KPMG managing partner Datuk Johan Idris said this while testifying as the 14th prosecution witness in Najib’s trial over the misappropriation of more than RM2 billion of 1MDB funds.
Johan was asked about a meeting at night on December 15, 2013 between KPMG, 1MDB and then prime minister Najib in the latter’s residence at Jalan Duta, where Johan was the sole KPMG representative allowed into the house for the meeting while other KPMG personnel waited outside.
KPMG had at that time not signed off on the audit report for 1MDB’s financial year ending March 31, 2013, as 1MDB had not provided the information that KPMG had asked for since April 2013.
Following that meeting, Johan had gone home and typed out the minutes of the meeting which he later shared with some of his KPMG colleagues, with the minutes recording Najib as having ordered KPMG to sign the audit by December 31, 2013 or just in about two weeks’ time.
Lead prosecutor Datuk Seri Gopal Sri Ram today noted that Johan had previously confirmed to Najib’s lawyer that his minutes did not reflect “pressure” exerted by Najib during the meeting, but asked the KPMG managing partner today to clarify the actual situation on December 15, 2013 at the meeting.
Sri Ram: You were asked to confirm that the minutes do not show there was any pressure exerted by the accused Datuk Seri Najib upon you at this meeting, and you answered yes, the minutes do not reflect it. My question is, it was you at ground zero on that day, was there pressure at all on you?
Johan: Yes, I put it as an intimidation.
Sri Ram: What was the nature of intimidation?
Johan: Well, intimidation for us to conclude and sign the audited financial statements of March 31, 2013.
Sri Ram: And from whom did this come?
Johan: Datuk Seri Najib.
At this point, Najib’s lawyer Wan Aizuddin Wan Mohammed highlighted that the word “intimidation” did not arise in any of Johan’s answers in cross-examination previously, but Sri Ram said it would be for the defence to raise this in submissions and they could not stop a witness from answering questions from his point of view.
The judge also suggested that the defence could raise this in submissions.
Earlier today, Wan Aizuddin suggested that the alleged misappropriation by 1MDB’s management would have been uncovered if KPMG had conducted its audit on 1MDB properly throughout the three financial years of 2010, 2011 and 2012 — when the audit firm was 1MDB’s auditor.
But Johan replied: “We have always conducted our audit properly.”
Wan Aizuddin: I put it to you that KPMG had acted systematically with the management of 1MDB by turning a blind eye to the ambiguous transaction thus allowing 1MDB monies to be misappropriated.
Johan: Totally disagree with it.
Later, Johan confirmed to Sri Ram that KPMG did not obtain any share of the monies siphoned from 1MDB, saying “not a penny”.
Sri Ram: For the period that my learned friend covered, the three years, 2010, 2011, 2012, where he has suggested to you that KPMG acted in concert with management to enable them to siphon out monies belonging to 1MDB, you answered you totally disagree. My question to you is this, apart from your audit fee which you received for the work, for the professional services delivered, did KPMG obtain any share of the monies which were siphoned from 1MDB?
Johan: None.
Sri Ram: Not a penny?
Johan: Not a penny.
Among other things, Johan confirmed that Najib had during the December 15, 2013 meeting said that he was attending the meeting in his capacity as the representative of 1MDB’s shareholder via his role as finance minister and not as prime minister.
Sri Ram then asked if Johan had personal knowledge of “large sums of 1MDB money” being allegedly siphoned into Najib’s account, with Johan then replying: “I don’t have any personal knowledge.”
Typically, 1MDB’s finances would have to be audited within six months from the end of its financial year which ended March 31, but KPMG in November 2013 was still pursuing the information requested months ago from 1MDB and could not sign off on the audited finances.
KPMG had wanted to check if 1MDB’s purported overseas investment was truly worth US$2.318 billion and also wanted to verify the value of the purported assets for the investment, and pressed for the information that would be in line with financial reporting standards and international standards of auditing.
“What the management has given to us are just confirmation from BSI (Bank) that these are the amount of the assets, so we are not able to accurately verify in terms of underlying value of assets, the appropriateness of assets and how we assign opinion to assets,” Johan told Wan Aizuddin today.
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.
In the end, KPMG did not sign off on 1MDB’s 2013 financial statement as the information required was still not provided to the auditors.
1MDB’s sole shareholder, Minister of Finance (Incorporated) (MoF Inc), on December 31, 2013 then terminated KPMG as the auditor for 1MDB with immediate effect, and replaced it with Deloitte KassimChan.
After Johan completed his testimony in court, former 1MDB company secretary Goh Gaik Kim started testifying in court as the 17th prosecution witness in this trial.
Goh, 54, was 1MDB’s company secretary from March 31, 2011 until April 1, 2016, and had also served as company secretary for 1MDB’s subsidiaries. She told the court that she is currently still serving as company secretary of TRX City Sdn Bhd.
Najib’s trial before High Court judge Datuk Collin Lawrence Sequerah resumes tomorrow morning.
Just before the end of proceedings this afternoon, deputy public prosecutor Mohamad Mustaffa P. Kunyalam said Goh is expected to continue testifying tomorrow, and that the prosecution expects to next call on former 1MDB company secretary Lim Poh Seng and former chief secretary to the government Tan Sri Mohd Sidek Hassan to testify as prosecution witnesses in this trial.
