Auditors KPMG removed for refusing to sign 1MDB financials, court told

 

The High Court heard that KPMG had questioned 1MDB’s US$2.3 billion investment in Brazen Sky Ltd as it could not verify the authenticity of the investment. (KPMG filepic)

KUALA LUMPUR: 

Najib Razak testified that 1MDB removed KPMG as its auditors in 2013 after the audit firm refused to sign off on the company’s financial statement for that year.

The former prime minister said he signed the letter dispensing with KPMG’s services after being told by 1MDB that KPMG refused to accept BSI Bank’s confirmation that a 1MDB investment of US$2.3 billion was being held with Brazen Sky Ltd.

The auditors said they would need to head to Hong Kong to verify the matter, he added.

Najib said the state investment arm had until Dec 31, 2013, to submit its accounts to the Companies Commission of Malaysia (SSM).

Referring to the minutes of a meeting, he said: “I had not in any way directed KPMG to accept the confirmation by BSI or 1MDB’s explanation.

“I asked the management to assist in obtaining the necessary information for KPMG,” he told the High Court at his 1MDB trial.

Earlier in the proceedings, the court heard that KPMG had questioned 1MDB’s US$2.3 billion investment in Brazen Sky Ltd as it could not verify the authenticity of the investment.

KPMG auditors then met Najib at his home on Dec 15 that year. Its managing partner, Johan Idris told the court that Najib had “ordered” him to sign off on the 2013 financial statement.

KPMG was subsequently replaced by Deloitte as 1MDB’s auditors.

Najib said 1MDB recommended that Deloitte take over at the 11th hour.

“They (Deloitte) complained that they were not happy with how KPMG conducted the audit.

“(Former 1MDB chairman) Lodin (Wok Kamaruddin) even mentioned that KPMG was being unfair in requesting something that 1MDB could not provide.”

Loo’s testimony like a Bollywood movie, says Najib

Najib also disputed former general counsel Jasmine Loo’s testimony earlier this year in which she said Kee Kok Thiam, an aide to Low Taek Jho (Jho Low) had prepared drafts of “donation letters” in a hotel room in London, nine years ago.

Loo told the court that the fugitive businessman had instructed Kee to prepare a letter purportedly from “Prince Saud” claiming that the money was a donation from the Arab royal family.

Others who were in the room included Ihsan Perdana Sdn Bhd managing director Shamsul Anwar Sulaiman and Yayasan Rakyat 1Malaysia project director Dennis See.

She said the drafting came after Shamsul spoke about how the public was discussing the 1MDB money being funnelled into Najib’s accounts.

Najib said Loo’s narrative sounded “more like a scene from a Bollywood movie than a credible sequence of events”.

The former prime minister is standing trial on 25 charges of abuse of power and money laundering over alleged 1MDB funds amounting to RM2.28 billion deposited into his AmBank accounts between February 2011 and December 2014.

The hearing before Justice Collin Lawrence Sequerah continues on Dec 12. - FMT