AN AUDITOR in the Najib Razak 1MDB corruption trial today said that the former prime minister “ordered” him to sign off on the 2013 financial statement despite the audit firm not receiving the documents it requested regarding the state investment firm’s US$2.3 billion overseas investments, the Kuala Lumpur High Court heard.

Johan Idris, KPMG Malaysia’s managing partner, said this was his impression towards Najib’s request made during a meeting at the latter’s residence at Langgak Duta on December 15, 2013. 

Reading his witness statement, Johan said that Najib, who was also the finance minister and 1MDB’s sole shareholder, wanted the auditing firm to sign off on and close the financial statement for the year ending March 31, 2013 by December 31, 2013.

“Before the meeting ended, Najib stated that he wished to see the 1MDB account signed by KPMG before or by December 31, 2013 but I did not respond to it.

“I also didn’t know why 1MDB refused to disclose information about the underlying assets that were said to be confidential. Furthermore, there were also no supporting documents presented to me at that time to show that the information was confidential,” Johan said, reading his witness statement. 

Deputy public prosecutor Deepa Nair Thevaharan then asked how he perceived the instruction from Najib, on wanting KPMG to sign off the 1MDB account by or before December 31. 

Deepa: How did you view the particular sentence mentioned to you by Najib at the meeting? 

Johan: His remarks were akin to an order. 

During this period of time, KPMG had refused to sign off the 2013 financial statement, as it was not happy with the information provided on the overseas investment.

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 an offshore company, Brazen Sky Ltd. 

The prosecution’s 14th witness said that 1MDB had furnished reports from BSI Bank on Brazen Sky but claimed they were not sufficient for KPMG to come up with an audit report that was deemed “appropriate”. 

Johan said KPMG wanted more information on the underlying assets in Brazen Sky because the investments were in the form of units. 

“I was informed that 1MDB must comply with the Financial Reporting Standard Accounting Standard and the International Standard on Auditing as well as Companies Act 1965. 

“As accounting standards have force of law, the non-compliance with the accounting standards show that 1MDB was also not obeying the law,” Johan said. 

Johan said that Najib was aware of the Brazen Sky investment but claimed 1MDB could not disclose further information because it was “confidential”. 

“Najib also questioned why KPMG was doubtful over the underlying assets to which I responded saying auditors need evidence to complete the audit process as required under the law,” he said. 

Since KPMG were unable to complete 1MDB’s audit report as the company failed to furnish information on Brazen Sky despite numerous requests, the Ministry of Finance terminated KPMG’s services and they were replaced by Deloitte KassimChan. 

Later during cross-examination, Najib’s lead defence lawyer Muhammad Shafee Abdullah contended that the former finance minister had never put pressure on KPMG to sign off on the financial statement.

However, Johan reiterated that Najib had told him in the meeting that he wanted the accounts closed by December 31, 2013. 

Shafee: Did he put pressure on anyone? Did he say, “Johan, if you don’t close the account by December 31, you will be sacked? Did he say that?”

Johan: He did say that he would like to see the accounts closed by December 31, 2013.

Shafee: He is the shareholder. He is responsible for that. Wouldn’t a shareholder want to see his company’s account that is long overdue closed by December 31 as requested by the board?

Johan: Noted. Yes.

Shafee: So, until the end, he didn’t put pressure on anyone.

Earlier today, the court excused 12th witness, former 1MDB chief financial officer Azmi Tahir, as the defence wanted him to submit his passport to verify if he had travelled to Brazil in 2014 for a FIFA World Cup match with fugitive businessman Low Taek Jho, better known as Jho Low, on a private jet. 

Azmi said he would present his passport if he still has possession of it. 

However, he denied he went to Brazil with Low. 

When Shafee asked if the defence could get his consent to verify these details with the Immigration Department, Azmi refused. 

Azmi would be recalled to take the stand when the trial resumes on May 9.

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 Collin Lawrence Sequerah will continue on May 9. – April 21, 2022.