AUDIT TAMPERING TRIAL | In April 2015, reports emerged that 1MDB chief executive officer Arul Kanda Kandasamy had allegedly submitted a falsified financial statement to various authorities.
The allegation was made by whistleblower website 'Sarawak Report', which Arul promptly dismissed as a lie.
“This is a lie. I have never provided any such statement to Bank Negara. To state otherwise is blatantly false and incorrect, as are any allegations that are based on this premise," he had said in a public statement.
But behind closed doors, Arul and the government were aware that 1MDB had conflicting versions of its financial statement and actively worked to keep it out of public knowledge, court proceedings have revealed.
The allegedly falsified financial statement was on whether 1MDB still had any money left in its segregated portfolio company (SPC) investment, often referred to as "fund units".
Testifying as the sixth witness in the 1MDB audit report tampering trial against ex-prime minister Najib Abdul Razak and Arul, former auditor-general Ambring Buang told the Kuala Lumpur High Court that the National Audit Department (NAD) had found discrepancies in 1MDB's financial statement.
Ambrin said he had on Feb 20, 2016, ordered his officer to provide a draft copy of the final 1MDB report to Najib's private secretary Shukry Mohd Salleh following a request.
Ambrin said he did not have any suspicion at the time and did not think it to be a major issue as the report would eventually be circulated to key government officials anyway so the government could prepare their responses when it is made public.
However, he said Najib, through Shukry, had two days later summoned him to the Prime Minister's Office.
Ambrin said he turned up out of respect for the prime minister. He added Shukry and then chief secretary to the government Ali Hamsa were also present.
"During the meeting, Najib asked me to tell him what are the critical and serious issues in the final 1MDB audit report. I then raised the issue of 1MDB having two versions of its financial statement ending March 31, 2014.
"One version of the financial statement sent to the Companies Commission of Malaysia (SSM) stated that 1MDB had utilised the funds redeemed from its SPC investment to repay 1MDB debts and for working capital.
"Another version of the financial statement sent to the Finance Ministry, Deutsche Bank and Ambank stated that the funds redeemed from the SPC investments were still in 1MDB's possession," he said.
Pressured into accepting
Upon hearing this, Ambrin said Najib had asked him to omit this fact from the final 1MDB audit report.
"Najib asked me not to include the issue of the two versions of financial statements in the final 1MDB audit report. At the time, Najib also promised me that the relevant authorities 'would get to the bottom of this' as soon as possible," he said.
On Feb 24, 2016, Ambrin said he was again summoned, this time to meet Ali at his office where the NAD was pressured into accepting feedback from 1MDB in the report.
Also present during the meeting were Ali's senior private secretary Norazman Ayob, Arul Kanda, Shukry, the Attorney-General's Chamber's Dzulkifli Ahmad, then Treasury deputy secretary-general Isa Hussain and Finance Ministry representative Asri Hamidon.
Dzulkifli would go on to become the MACC chief five months later.
Ambrin said the NAD eventually complied and had to destroy the previous 60 copies of the final 1MDB audit report due to the new changes. However, one copy was spared and is now a piece of key evidence in the audit tampering trial.
Last week, Ali had testified in the same trial that Arul had tried to get the fact about the two conflicting financial statements omitted from the final 1MDB report.
Ali said Ambrin raised the issue of two different versions of 1MDB’s financial statements for 2014 to which Arul Kanda admitted there were two different versions.
“He (Arul Kanda) insisted that the conflicting versions should not be included in the 1MDB audit report and asked for a police investigation to be conducted," Ali had said.
Ali said Ambrin only gave in to the request to omit this fact after he was promised that the Finance Ministry would lodge a police report over the matter.
The court has not yet established which version of the financial statement is genuine and which is falsified. It has also not yet established if the Finance Ministry ever lodged the police report as promised.
Najib was both the prime minister and finance minister at the time. He is accused of using his position to gain protection from civil disciplinary action by tampering with the final 1MDB audit report.
He is charged under Section 23(1) of the MACC Act 2009 which carries a jail term of up to 20 years and a fine of at least five times of the amount of gratification or RM10,000, whichever higher.
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