Najib pressured 1MDB to change audit firm to close report, court hears

KUALA LUMPUR: A former 1Malaysia Development Bhd (1MDB) CEO told the High Court that he was pressured by former prime minister Datuk Seri Najib Razak to ensure 1MDB’s financial audit report for 2013 was closed.

Mohd Hazem Abd Rahman, 48, who was reading his 110-page witness statement, said he was pressured by various quarters, especially Najib, who had contacted him through mobile phone several times to make sure the financial audit report was closed.

The witness said audit firm KPMG was supposed to close 1MDB’s financial report for the year 2013 but the firm did not do so as it did not want to sign off on 1MDB’s Brazen Sky Ltd investment as they were unhappy with the explanations given.

(The court had previously heard that Brazen Sky, incorporated in the British Virgin Islands in July 2012, was a special purpose vehicle (SPV) set-up for the purpose of repatriating 1MBD’s money.)

Hazem added that the Pekan MP ordered the 1MDB management to replace KPMG.

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

“Because of Najib’s insistence to close the 1MDB account and on the company’s reputation, the management decided to suggest to the directors and shareholders to replace KPMG with Deloitte, ” he said here on Tuesday (Sept 15).

Hazem said he had no other suggestions apart from suggesting to the board of directors to replace KPMG with Deloitte.

In his tenure as the CEO, Hazem said he only knew of Deloitte closing 1MDB’s account for the years 2013 (after it took over from KPMG) and 2014.

“However, in 2014, Deloitte gave pressure to the 1MDB management to prove or explain about Brazen Sky’s investments.

“I was pressured because detailed investments at Brazen Sky could not be explained.

“Deloitte decided that 1MDB account would not close if it fails to give that information, ” he said.

This, he added, meant that Brazen Sky’s investment needed to be liquidated and the money repatriated back to Malaysia.

Hazem said he raised the issue with fugitive businessman Low Taek Jho, or better known as Jho Low, and Low made plans to liquidate the investment.

“By the end of 2014, only US$1.3bil (RM5.37bil) from US$2.3bil (RM9.5bil) was repatriated to Malaysia, ” he said.

Because 1MDB was not able to fully liquidate the investment, Hazem said he and 1MDB’s chief financial officer Azmi Tahir went to Singapore to meet with a Deloitte Asia Pacific representative there to plead for the 1MDB account to be closed with only US$1.3bil liquidated.

“The representative made a decision to send the management from Deloitte Asia Pacific to meet with 1MDB’s board of directors to get the board’s commitment that after the audit account is closed, the board would ensure that all of the investments would be liquidated as soon as possible, ” he said.

Najib, 67, is facing four charges of abusing his position to obtain gratification totalling RM2.28bil in 1MDB funds and 21 counts of money laundering involving the same money.

The hearing before Justice Collin Lawrence Sequerah continues on Thursday (Sept 17).