PUTRAJAYA: Audit firm KPMG’s refusal to sign off 1Malaysia Development Bhd’s (1MDB) company’s financials in 2013, was due to each auditor’s “different requirements”, a former 1Malaysia Development Bhd (1MDB) chairman said.
He also said KPMG had been unfair to the company.
Testifying in the RM2.28bil 1MDB trial involving Datuk Seri Najib Razak at the High Court here yesterday, Tan Sri Che Lodin Wok Kamaruddin downplayed KPMG’s refusal, saying it was a disagreement on the processes.
The court had heard in previous proceedings that KPMG refused to sign off on 1MDB’s 2013 financials as it could not verify the authenticity of the fund’s US$2.3bil investment in Brazen Sky Ltd.
“First, there was a delay. Then there was a disagreement (on) how it should be done,” said Che Lodin during cross-examination by deputy public prosecutor Kamal Baharin Omar.
The witness also told the court that KPMG was being “unfair” to 1MDB when it requested additional documents on the investment.
“I said, go take a look (at the investment) yourself,” he added.
DPP Kamal Baharin: Why did KPMG delay its signing?
Che Lodin: I think the issue centred on KPMG not agreeing with our suggestion that they should go to Hong Kong to see for themselves our investment in Brazen Sky.
The witness also agreed that a meeting was called at Najib’s residence in Langgak Duta here with KPMG, including the firm’s then managing partner Datuk Johan Idris, over the matter on Dec 31, 2013.
“I was there (at the meeting),” he said.
DPP Kamal Baharin: What was requested by Datuk Johan?
Che Lodin: They wanted to look at this investment in Brazen Sky in the form of a segregated portfolio. I’m not an accountant or an auditor, so I’m not too familiar with what they wanted.
KPMG’s refusal to sign ultimately resulted in its removal as the company’s auditor by 1MDB’s board of directors.
It was later replaced with another audit firm, Deloitte.
“When we changed to Deloitte, they were happy to sign off (on the financials).
“Maybe KPMG has requirements that are not necessarily a (universal) requirement,” Che Lodin said.
On Oct 30 last year, the High Court ordered Najib to enter his defence on four counts of using his position to obtain RM2.28bil gratification from 1MDB’s funds and 21 counts of money laundering involving the same amount.
The hearing continues before Justice Collin Lawrence Sequerah.
