1MALAYSIA Development Bhd’s (1MDB) previous auditors, KPMG, had been adamant on meeting then prime minister Najib Razak in 2013 regarding the state investment firm’s financial statement as it was concerned over an overseas investment in an off-shore company, Brazen Sky Ltd, a prosecution witness told the court in Najib’s 1MDB trial today.

Former 1MDB chief financial officer (CFO) Azmi Tahir said KPMG partner Ahmad Nasri Abdul Wahab made a request to meet Najib, who besides being prime minister then, was also the finance minister and chair of 1MDB’s board of advisors.

KPMG wanted to meet Najib sometime in November 2013 over a RM9.8 billion investment by 1MDB abroad, said Ahmad Nasri who is the prosecution’s 12th witness during cross-examination by defence lawyer Wan Aizuddin Wan Mohammed at the Kuala Lumpur High Court today.

The audit firm had concerns about the overseas investment even after information and documents were provided by 1MDB management, said Azmi, 48.

According to Azmi, KMPG’s Ahmad Nazri, who telephoned him, said during their call that KPMG  would only sign-off the 2013 financial statement if they heard from Najib himself about the investment in Brazen Sky Ltd, a British Virgin Islands (BVI) incorporated entity.

Brazen Sky is an off-shore company known to be linked to fugitive businessman Low Taek Jho, also known as Jho Low.

Wan Aizuddin: What was your reaction when you heard the request from KPMG?

Azmi: I was surprised when Ahmad Nasri said this in a phone call. I asked him why they wanted to meet the prime minister? He told me they wanted to hear from the shareholder (Finance Ministry) on the US$2.3 billion investment and whether everything is okay. They said if the prime minister says okay, then we would sign off (on 1MDB’s financial statement).

Azmi was referring to 1MDB’s financial statement for the year ending March 31, 2013, which KPMG refused to sign-off, as it was not happy with the information provided.

The yearly financial statement would normally be signed-off by its auditors within six months or by September 2013, but this was delayed as the audit firm was still seeking information from 1MDB on their purported investment in Brazen Sky. 

Azmi today said that the meeting between KPMG and Najib took place on December 15, 2013, at his Langgak Duta residence, and that Low was also present.

Azmi then said that he had informed Low about KPMG’s request to meet Najib prior to the meeting. 

He then told Wan Aizuddin that Low wanted to know why KPMG was adamant on meeting Najib. 

“I informed Jho Low about KPMG’s request and he asked why they wanted to meet Najib. He asked why KPMG could not accept the information provided by the (1MDB) board. 

“I told Jho Low that if KPMG’s meeting with Najib was satisfactory, then they would sign-off (on the financial statement). 

“Jho Low then kept asking me “Sure ah?” to which I replied ‘Yes’,” the witness said. 

To this, Wan Aizuddin asked Azmi why he had to inform Low about KPMG wanting to meet Najib, instead of the latter’s then principal private secretary Azlin Alias.

Azmi responded saying that the 1MDB management “generally” provided updates to Low, especially if they were matters involving the prime minister. 

“None of us dealt with the PMO (Prime Minister’s Office). It was through him (Low).”

The trial’s previous witness, former 1MDB chief executive officer Sharol Azral Ibrahim Halmi, said that Brazen Sky was set up by Low and his associates as part of a ruse to divert 1MDB investments in PetroSaudi Oil Services Ltd. 

Under further cross-examination today, Azmi said that Najib did not say “okay” to KPMG signing-off the 2013 financial statement. 

Azmi, who was present at the meeting in Langgak Duta on December 15, said those words did not come from the former prime minister.  

As KPMG’s position did not change even after the meeting, 1MDB then appointed Deloitte to complete the audit two weeks later.

Azmi said that Deloitte was one of the big four international auditing firms that was willing to audit 1MDB in 2013. 

Besides KPMG and Deloitte, the other two of the big four audit firms are Ernst and Young and PricewaterhouseCoopers (PwC).

Ernst and Young had been 1MDB’s first auditor and were replaced by KPMG in 2010. 

Azmi said that neither Najib nor Low interfered in the selection of the new auditor. 

He said that former 1MDB CEO Mohd Hazem Abd Rahman directed him to look for another auditor.

“We were already scrambling on our own to find an auditor after the impasse with KPMG, as 1MDB’s 2013 audit was already overdue,” Azmi added.

Azmi served as the CFO of 1MDB from June 2012 to December 2017. 

Najib is standing trial for corruption over the misappropriation of RM2.28 billion in 1MDB funds. 

He faces 25 charges, four for abuse of power and 21 for money-laundering, for offences committed between 2011 and 2013.

The hearing before Justice Collins Lawrence Sequerah will continue tomorrow. – April 20, 2022.