NAJIB TRIAL | Former SRC International director and chief executive officer (CEO) Nik Faisal Ariff Kamil had allegedly lied to the board that the company’s 2013 account had been audited, then-company chairperson Ismee Ismail (above) testified today.
However, despite this and earlier reservations over the actions of Nik Faisal, Ismee also acknowledged that he had not sought to refer the matter to the prime minister or Ministry of Finance Inc.
Ismee, the 39th witness at the trial of former prime minister Najib Abdul Razak, told the court yesterday that Nik Faisal allegedly lied to the company's board of directors (BOD) and kept the latter in the dark over key matters in relation to its financial management.
Today, he testified that Nik Faisal allegedly misled the board into thinking the 2013 company accounts had been audited.
When pressed by defence counsel Harvinder Singh during cross-examination today that Ismee, as company chairperson, could have brought the matter up with the shareholders - namely 1MDB and MOF Inc - the latter denied they were serious enough to warrant alerting the other parties.
This was after Harvinder established that Ismee was “influential enough” to directly request a meeting with Najib.
The court heard on Tuesday that Najib, who was also finance minister and the head of Minister of Finance Inc at the time, was appointed as SRC International's adviser emeritus.
Harvinder: You are influential enough to ask for a meeting with the PM (Najib)?
Ismee: I can ask for a meeting with the PM.
Harvinder: Do you have the ability to correspond with MOF Inc or PM?
Ismee: Yes
Harvinder: [...] You feel you need not deal with MOF Inc or PM directly?
Ismee: For MOF Inc, I did not see a reason to (meet), with PM, I had no reason to doubt that (instructions) had come up front from him.
Harvinder: Whatever was implied (tersirat) was based on what Nik Faisal told you?
Ismee: What he told us (BOD).
Harvinder: Would you accept that at some certain point in time, it would have been incumbent on you to escalate the matter either to MOF Inc or the PM directly if you had the impression Nik Faisal was not telling the truth?
...in your mind, the CEO (Nik Faisal) was lying to the BOD, (when) the BOD account was not audited, is that not serious enough to escalate to shareholders?
Ismee: I disagree
Later, Ismee when asked if Nik Faisal, on behalf of the board, had signed a resolution that SRC International’s 2013 account had been audited, Ismee replied in the affirmative.
He told the court he only knew from reading a media report in 2014 that the accounts were not audited. However, Ismee said he chose to investigate the matter himself instead of escalating the problem to the then-premier.
Harvinder: It would have been incumbent on you as chairperson, that it would benefit the people of Malaysia to escalate matters to the PM?
Ismee: I disagree. I needed to investigate the non-filing (of the financial statements) and I called audit (firm) Deloitte on the delay. They said they had not received several audit confirmations from the management.
I took responsibility and asked what audit confirmations were outstanding. They (Deloitte) gave me (info) which deals with local banks, among others. It was on my table for two weeks and I dealt with it one by one. I took responsibility to close the accounts.
Harvinder: In your mind, the CEO (Nik Faisal) lying to BOD that the account was not audited, is that not serious enough to escalate to the shareholder?
Ismee: I disagree
Harvinder: … in your mind, you were concerned enough to talk to the prime minister specifically but did not escalate (your concerns over Nik Faisal) to the BOD, shareholder, MOF Inc or PM?
Ismee: (I did not) Because the problem was resolved...I cannot say I agree or disagree.
Ismee further testified that he had been informed at the time that the reason Nik Faisal did not disclose the true audit status was that he was busy with other matters.
It was previously reported that Deloitte Malaysia - the third audit firm after both Ernst & Young and KPMG - resigned as the auditor for 1MDB in 2016.
Deloitte took over for the years 2013 and 2014 after 1MDB contended that KPMG could not conclude its 2013 accounts.
According to the Public Accounts Committee, 1MDB terminated KPMG's services after auditors asked certain questions about the 2013 annual report and was set to issue a qualified opinion.
The Securities Commission stated last January that it was investigating Deloitte over their audit on 1MDB, while police raided the firm’s office in Kuala Lumpur last month.
Apart from the 2013 audit, the claims made by Ismee in his testimony was that Nik Faisal withheld the existence of an AmIslamic Bank account with an account number ending with 736 that was registered under SRC International's name.
It was this account where the first KWAP loan tranche of RM2 billion was transferred on Aug 29, 2011, without the board's knowledge.
SRC International later receive a second tranche loan of RM2 billion from KWAP in early 2012.
Nik Faisal also allegedly neglected to inform the board about him seeking an RM3.95 billion loan for SRC International in a letter to Najib dated June 3, 2011.
A former subsidiary of 1MDB, SRC International was transferred to MOF Inc in February 2012.
Nik Faisal is currently missing and actively sought by the authorities.
Najib is on trial for seven charges for alleged criminal breach of trust, abuse of power and money laundering in relation to RM42million in funds concerning former 1MDB subsidiary SRC International.
Today is the 24th day of the trial, taking place at the Kuala Lumpur High Court with Judge Mohd Nazlan Mohd Ghazali presiding. - Mkini
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