KUALA LUMPUR: Former 1MDB CEO Mohd Hazem Abdul Rahman told the Najib Razak trial that the former prime minister met company staff and directors to tell them to persuade auditors from KPMG to close the company’s 2013 financial statement.
He told the High Court that he received an email from fugitive businessman Low Taek Jho (Jho Low) on Nov 28, 2013 informing him and others to come to Najib’s house that night.
Hazem said others who joined the meeting were 1MDB chairman Che Lodin Wok Kamaruddin, 1MDB director Ismee Ismail, chief financial officer Azmi Tahir and Najib’s principal private secretary Azlin Alias. He also saw Yak Yew Chee, a banker from BSI Bank Singapore, outside but who joined them when called in later to explain a matter.
To a question by deputy public prosecutor Mohamad Mustafa P Kunyalam on which house he went to on Nov 28, 2013 Hazem said he went to Najib’s private residence in Langgak Duta.
“When I arrived at Datuk Seri Najib’s house, I saw Jho Low talking to him. Jho Low started the meeting by saying how we should justify 1MDB’s investment in fund manager Brazen Sky Ltd,” he said.
Hazem added the Penang businessman told them that US$2.3 billion in Brazen Sky was in BSI Bank’s custody, and as a well-known financial institution, BSI Bank had informed them that the investment could generate high returns.
“Datuk Seri Najib heard and agreed with what Jho Low explained to us. He did not object to Jho Low’s suggestions.
“Yaw Chee was called in to the meeting to explain that the documents the BSI Bank gave KPMG were sufficient to state the balance in their bank account.
“Datuk Seri (Najib) then asked Yaw Chee when the funds could be redeemed, to which Yaw Chee said the investments took between six and nine months, and 1MDB could turn the investments into cash subsequently,” he said, responding to Mustafa’s question about the meeting.
Hazem added that Low’s justification looked reasonable, but added that Low had indirectly told them to tell lies to the auditors.
“I believe the funds overseas may have been spent for Umno,” he said.
Meeting with KPMG auditor
The witness said another meeting was held on Dec 15, 2013 at Langgak Duta again where KPMG auditor Johan Idris met Najib as KPMG wanted to hear the prime minister’s explanation on investments in Brazen Sky.
Johan is the managing partner of KPMG here.
“Azmi, Lodin and I had been prepped by Jho Low, through his emails, to answer KPMG’s questions on Brazen Sky.
“Johan asked Datuk Seri if he was aware of the Brazen Sky investments, and he answered he had been informed about it.
“Datuk Seri later questioned Johan why KPMG was doubting the Brazen Sky investments, and told Johan he wanted the accounts to be closed by Dec 31,” Hazem said.
Hazem said Johan did not give any feedback to Najib on the spot.
“However this meeting failed to persuade KPMG to close the accounts even after hearing the prime minister’s explanation.”
Hazem said 1MDB management staff subsequently proposed to the company directors to replace KPMG with Deloitte as auditors.
“Datuk Seri also called me a few times to tell me that I must ensure the 2013 financial statement is closed.
“We were left with no choice but to replace KPMG because we were under pressure from various parties, including the prime minister,” he added.
When Deloitte took over, Hazem said the auditors also confronted them over the Brazen Sky investment in 2014.
“I felt pressured because I could not justify the investment. Deloitte told us they would not close the 2014 statement if they could not get our feedback”.
Hazem added he raised the issue of Deloitte’s refusal to Low, and that the businessman came up with a plan to liquidate US$1.3 billion of the US$2.3 billion in Brazen Sky, and repatriate the money.
“Azmi and I flew down to Singapore to meet with Deloitte Asia Pacific representatives. We begged them to close the statement at US$1.3 billion in liquidated funds,” he said.
The hearing continues before High Court judge Collin Lawrence Sequerah on Thursday.
Najib faces 25 charges of abuse of power and money laundering over alleged 1MDB funds amounting to RM2.28 billion deposited in to his AmBank accounts between February 2011 and December 2014.