1MDB replaced auditor KPMG after PM Najib called me personally, says ex-CEO

KUALA LUMPUR : Audit firm KPMG was removed as 1Malaysia Development Berhad’s (1MDB) auditor following pressure from then prime minister Datuk Seri Najib Razak himself, 1MDB’s former CEO told the court today (Nov 15).

Former 1MDB CEO Mohd Hazem Abd Rahman was testifying as the 10th prosecution witness in Najib’s trial involving 25 charges in relation to more than RM2 billion of 1MDB’s funds.

Mohd Hazem was explaining why he had proposed for 1MDB to replace KPMG with Deloitte, following KPMG’s refusal to sign off on its audit of 1MDB’s 2013 financial statements due to insufficient information provided to the auditors.

Asked by lead prosecutor Datuk Seri Gopal Sri Ram as to why he had proposed for KPMG to be removed, Hazem replied: “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.”

Sri Ram: Pressure came from who?

Hazem: Pressure came directly from the prime minister. I have been called directly by the prime minister even to ask about the update on the closure of the audit.

Former 1MDB CEO Mohd Hazem Abd Rahman was testifying as the 10th prosecution witness in Datuk Seri Najib Razak’s trial involving 25 charges in relation to more than RM2 billion of 1MDB’s funds. ― Picture by Hari Anggara
Former 1MDB CEO Mohd Hazem Abd Rahman was testifying as the 10th prosecution witness in Datuk Seri Najib Razak’s trial involving 25 charges in relation to more than RM2 billion of 1MDB’s funds. ― Picture by Hari Anggara

Sri Ram: Were you in a position at that time to disobey the accused?

Hazem: No, absolutely not.

Hazem today maintained his previous testimony about a meeting at Najib’s house in relation to KPMG’s audit in 2013, and also confirmed that he — throughout his tenure in 1MDB — did not have any misunderstandings with Najib. 

In late 2013, the auditor KPMG had yet to sign off on its audit for 1MDB’s financial statement for the financial year ending March 31, 2013, as it was still pressing 1MDB for further details on the company’s alleged US$2.3 billion investment abroad.

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 and a sham investment — were “invested” 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.

On November 28, 2013, now-fugitive Low Taek Jho — described by 1MDB’s former officials as Najib’s alleged adviser and trusted proxy for 1MDB matters — was said to have attended a meeting with Najib, 1MDB officials and BSI Bank managing director Yak Yew Chee in relation to the US$2.3 billion purported investment.

Datuk Seri Najib Razak arrives at the Kuala Lumpur High Court on October 26, 2021. ― Picture by Miera Zulyana
Datuk Seri Najib Razak arrives at the Kuala Lumpur High Court on October 26, 2021. ― Picture by Miera Zulyana

Today, Sri Ram asked Hazem what he saw of the ties between Low — popularly known as Jho Low — and Najib at that November 2013 meeting in Najib’s Jalan Langgak Duta residence.

Sri Ram: When you had the meeting in the accused’s house when Jho Low was present, from your observation, what was your observation of the relationship between Jho Low and the accused?

Hazem: It is very, very close.

Among other things, Hazem today confirmed that he had previously denied intentionally misleading the 1MDB board of directors, adding that he was following “instructions from Jho Low” when he was advising the board.

Asked if Najib had said or done anything to dissociate himself from Low during the meeting at Najib’s house, Hazem said, “No”.

Sri Ram also asked Hazem to explain why he had not mentioned Low’s role in 1MDB to KPMG auditors during a meeting between 1MDB and KPMG on November 29, 2013 on the 2013 audit, with Hazem then saying: “It is also instruction by Jho Low not to reveal his name.”

Confirming that he had previously denied having acted in a “conspiracy” with Low and the others in relation to 1MDB, Hazem also confirmed that he had not received any money from Low.

Hazem also said he had followed Low’s instructions as he viewed the latter to be equivalent to the prime minister: “Because, to us, basically Jho Low is the PM, Jho Low is the man of the PM.”

On November 28, 2013, now-fugitive Low Taek Jho — described by 1MDB’s former officials as Datuk Seri Najib Razak’s alleged adviser and trusted proxy for 1MDB matters — was said to have attended a meeting with Najib, 1MDB officials and BSI Bank managing director Yak Yew Chee in relation to the US$2.3 billion purported investment. — Picture via Facebook
On November 28, 2013, now-fugitive Low Taek Jho — described by 1MDB’s former officials as Datuk Seri Najib Razak’s alleged adviser and trusted proxy for 1MDB matters — was said to have attended a meeting with Najib, 1MDB officials and BSI Bank managing director Yak Yew Chee in relation to the US$2.3 billion purported investment. — Picture via Facebook

As for monies that went out of 1MDB in payments with irregularities, Hazem confirmed to Sri Ram that not a single cent of such funds went into his bank account and that he did not financially benefit in any way from those transactions.

Instead, after being shown a chart of money trail of how millions of ringgit originating to loans borrowed by 1MDB as well as a bank account statement, Hazem today confirmed that some of these funds totalling RM49 million was shown to have allegedly entered into a bank account under Najib’s name.

Previously, Hazem had in court testified of KPMG having met with Najib on December 15, 2013 in Najib’s house over the US$2.3 billion purported investment, with KPMG saying there was insufficient information provided while Najib had expressed his hope that KPMG would close the audit by December 31, 2013.

Hazem had also testified that KPMG did not sign off on 1MDB’s financial statement for the financial year 2013 due to dissatisfaction with the documents and answers given regarding 1MDB’s alleged overseas investment.

Hazem had also previously testified that 1MDB management had proposed to its board of directors and shareholder for KPMG to be replaced with Deloitte, due to Najib’s alleged demands for the 1MDB audit to be completed and due to the company’s reputation.

“This decision was made as I received pressure from various quarters especially Datuk Seri Najib who contacted me several times through mobile phone to ensure that 1MDB’s 2013 financial audit report is closed. I had no other proposals except to propose to the board of directors to replace KPMG with Deloitte,” he had previously told the court.

Hazem had said that this was the first time that Najib had contacted him directly via phone.

Najib’s 1MDB trial before High Court judge Datuk Collin Lawrence Sequerah resumes tomorrow, with the 12th prosecution witness and former 1MDB chief financial officer Azmi Tahir expected to resume testifying.

By : IDA LIM – MALAY MAIL

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