Conflicting 1MDB financial statements removed

KUALA LUMPUR: Two conflicting versions of the 1Malaysia Development Bhd (1MDB) financial statements for the year 2014 were among four issues removed from the 1MDB audit report.

Former Chief Secretary to the Government Tan Sri Ali Hamsa, who was reading his witness statement at the Public Accounts Committee (PAC) trial involving Datuk Seri Najib Razak and former 1MDB CEO Arul Kanda Kandasamy, said the matter was raised during a coordination meeting he chaired with representatives from relevant agencies on Feb 24, 2016.

The meeting was directed by Najib to address his dissatisfaction with the 1MDB audit report prepared by the National Audit Department (NAD).

“He did not want two different financial statements for 1MDB to be submitted in the audit report.

“At that time, I did not know what was the problem with 1MDB’s annual financial statement submitted in the report,” he testified yesterday.

Despite being a member of the 1MDB board of advisers, Ali said he was never called to attend any meeting and never signed any document.

At the meeting on Feb 24, Arul Kanda, then auditor-general Tan Sri Ambrin Buang and Saadatul Nafisah (NAD), Datuk Seri Mohamad Isa Hussain and Asri Hamdin (Treasury), Datuk Dzulkifli Ahmad (Attorney General’s Chambers), Tan Sri Shukry Mohd Salleh (Prime Minister’s Office) and Ali’s senior private secretary Datuk Norazman Ayob were present. No minutes were recorded.

Ali said Arul Kanda had voiced his disapproval on various matters in the report, saying that they were not factual and merely hearsay.

“Arul Kanda insisted that these should not be included in the report. He also insisted that the report be in accordance with what he wanted,” Ali added.

At the meeting, Ali said Ambrin brought up the issue of two different versions of financial statements, and this was admitted by Arul Kanda.

Arul Kanda insisted that the conflicting versions be omitted and asked for a police investigation to be conducted, he added.

Ali said the meeting agreed that the Ministry of Finance Inc (MOF Inc) should lodge the police report.

Ali said he instructed Isa to do so and the latter had no objections.

Another matter that was struck out of the report was the presence of fugitive financier Low Taek Jho at the 1MDB board of directors meeting relating to the Islamic Medium Term Notes (IMTN) investment.

Low’s presence was addressed in the report because the NAD’s due diligence found that he did not hold any position or played any role in 1MDB.

“Therefore, his presence in the meeting was viewed as a red flag,” Ali said.

Shukry then requested for Low’s presence to be removed after taking into account the sensitivity of the matter and to prevent it from being manipulated by the Opposition at that time.

Another matter that was requested to be removed was an agreement between Country Groups Securities Thailand and ACME Time Limited.

Arul Kanda said the agreement was out of the NAD’s auditing scope because it involved a “secondary market” and outside of 1MDB’s involvement, Ali testified.

The fourth matter, he said, was the delay in the issuance of IMTN bonds with government guarantees and Arul Kanda said issues pertaining to the issuance were business decisions.

According to Ali, Ambrin agreed to have all four issues removed.

On March 1, 2016, Ali said a final review session by the audit team and 1MDB was held at his office.

“I was not involved in the discussion that day. I only prepared the space for both parties to resolve issues,” he added.

On March 3, he said Norazman informed him that Saadatul would come to the office to deliver the newly printed audit report.