‘Shareholder’ pressured 1MDB board, management over audit: KPMG partner

1MDB TRIAL | KPMG’s managing partner testified today that he was told by the 1MDB board and management somewhere in 2013 that they were under pressure from ‘shareholder’ Najib Abdul Razak.

However, Johan Idris conceded that, based on the minutes of a meeting he had with the former prime minister and finance minister on Dec 15 that year, there was no pressure on the management.

The 14th prosecution witness was testifying during this afternoon’s RM2.28 billion corruption trial against Najib, who also used to be chairperson of the Malaysian sovereign wealth fund’s board of advisors.

During proceedings before the Kuala Lumpur High Court, Johan said that he got this impression during KPMG’s meetings with the 1MDB board and management throughout 2013.

While under cross-examination by lead defence counsel Muhammad Shafee Abdullah, the witness said that the pressure was in relation to 1MDB’s US$2.3 billion overseas in the Cayman Islands.

Earlier today, Johan testified that Najib seemed to have ordered KPMG to sign off on 1MDB’s 2013 accounts despite the auditor’s reservation over the overseas investment.

Refusal to sign off

Following the refusal to sign off, KPMG was removed as the auditor on Dec 31 that year, and another auditor, Deloitte, was brought on board.

This afternoon, Shafee was grilling Johan over meetings between him and 1MDB’s board and management over the investment, which was in the form of six promissory notes with British Virgin Islands-incorporated, Brazen Sky Limited.

Muhammad Shafee Abdullah

Johan testified that the meetings were in relation to KPMG’s desire to seek more supporting documents and information about the investment, which 1MDB was unable to provide.

Johan: They (1MDB board and management) were under pressure by the shareholder (Najib).

Shafee: You are saying they were under pressure from the shareholder?

Johan: In relation to the six promissory notes to be signed off (1MDB’s audit for 2013 by KPMG).

The witness said that due to the problems faced by KPMG to get the required information for the audit, the auditor had then pressed to meet Najib during the Dec 15 meeting that year.

Shafee then went on a lengthy cross-examination over whether Najib could have ever exerted pressure on 1MDB board and management, with Johan giving non-committal answers over the issue.

1MDB is fully owned by the Minister of Finance Incorporated (MoF Inc), with the sole shareholder referring to the finance minister.

However, towards the end of today’s proceedings, Johan conceded that Najib did not exert pressure on 1MDB management based on the auditor’s minutes of the Dec 15 meeting.

Shafee: Was there pressure by the prime minister on management, based on what I told you (from the minutes)?

Johan: No.

However, the witness did not answer Shafee’s question on whether Najib ever told Johan that KPMG would be removed as the auditor if it refused to sign off on the accounts.

Proceedings before trial judge Collin Lawrence Sequerah will resume on May 9.

Najib Abdul Razak

Najib is on trial for four counts of abuse of power and 21 counts of money laundering involving RM2.28 billion of 1MDB’s funds.

The prosecution contended that the wrongdoing at 1MDB was done by businessperson Low Taek Jho better known as Jho Low under the authority of Najib.

The defence team claimed that the accused had no knowledge of wrongdoing and that the whole embezzlement scheme was solely masterminded by Low and several members of the fund’s management team. - Mkini