PRESSURE from former prime minister Najib Razak led 1Malaysia Development Bhd (1MDB) to change auditors from KPMG to Deloitte after the former refused to sign off on the state investment firm’s 2013 accounts, the Kuala Lumpur High Court heard today. 

Former 1MDB CEO Mohd Hazem Abdul Rahman said KPMG also did not want to sign off on 1MDB’s Brazen Sky investment as the firm was unhappy with the explanations given.

“KPMG did not close the 2013 1MDB financial report as it was unhappy with the documents and answers that were given.

“Because of Najib’s insistence on closing the 1MDB account and on the company’s reputation, the management suggested to the directors and shareholders to replace KPMG with Deloitte.

“This decision was made by me because there had been pressure from several parties, including Najib, who contacted me several times via phone to ensure the 2013 1MDB financial report was closed,” Hazem, 47, said today. 

Hazem is the 10th prosecution witness in Najib’s graft trial, where he faces four counts of abuse of power to enrich himself with RM2.3 billion from 1MDB and 21 counts of laundering the same amount. He faces up to 20 years imprisonment, if convicted. 

Previously, Hazem had recounted in court how Najib held a meeting at his home in Langgak Duta on December 15, 2013, with KPMG officials to resolve the matter, to no avail.

Hazem said Najib, who was then also finance minister, had questioned why KPMG was asking more questions when BSI Bank in Singapore had provided the necessary documents. 

“Najib questioned why KPMG was raising suspicions about the investment’s underlying assets as BSI Bank had shown investment statements. 

“Najib then said to (KPMG official) Johan Idris that he wanted KPMG to close the 1MDB account before December 31, 2013,” he said.

KPMG was 1MDB’s auditor in 2010, 2011 and 2012 but refused to sign off in 2013.

It was replaced by Deloitte, which was fined RM2.2 million last year over lapses in the 1MDB audit.

The trial resumes on Thursday. – September 15, 2020.