KUALA LUMPUR (Nov 16): Former prime minister Datuk Seri Najib Abdul Razak was instructed by fugitive financier Low Taek Jho, or Jho Low, not to talk too much at a meeting with 1Malaysia Development Bhd (1MDB) auditors KPMG when they met at Najib’s house to discuss the firm's refusal to sign off on 1MDB’s 2013 accounts.

Former chief financial officer (CFO) of 1MDB Azmi Tahir, testified on Tuesday in the 1MDB-Tanore trial that the meeting on Dec 15, 2013 at Najib’s Langgak Duta Residence was because KPMG was dissatisfied with the inadequate explanations and documents provided in relation to the company’s huge investment of US$2.3 billion in an unknown fund, Bridge Global SPC, that was made through Brazen Sky Ltd, a special purpose vehicle of 1MDB.

Frustrated at the lack of progress, KPMG requested a meeting with the shareholder of 1MDB — in this instance, the Ministry of Finance, which was represented by Najib as the then prime minister and finance minister. However, the meeting was not minuted as it was supposed to be informal.

Azmi testified that the night before the meeting Jho Low had sent him an email which stated how Najib should act at the meeting, underlining that Najib “should not talk too much” at the meeting.

“As YAB PM (Najib) has been briefed by the chairman of 1MDB and management of 1MDB on several occasions, YAB PM is recommended not to engage in a lengthy discussion with KPMG over the issues, although YAB PM may offer them a brief opportunity to air their views. YAB PM to state clearly that he has been briefed and heard both sides, and is aware of the transactions and comfortable with them given all the facts. As a final position: YAB PM may suggest that KPMG may make disclosure notes (but not qualifying accounts) as to the basis of valuation is based on confirmation from the regulated financial institutions,” according to the email Azmi read out in court on Tuesday.

The strategy outlined points for Najib, including expressing his confidence in the credentials of BSI Bank in Switzerland, which was acting as the fund manager of 1MDB’s purported US$2.3 billion investment.

The said meeting with KPMG at Najib’s residence was attended by the audit firm’s managing partner Datuk Johan Idris. On the 1MDB side, Azmi along with former 1MDB CEO Mohd Hazem Abdul Rahman and former 1MDB chairman Tan Sri Lodin Wok Kamaruddin were in attendance together with Jho Low and Najib.

Azmi testified that when he arrived at Najib’s house, he had observed that Najib already had with him a copy of Jho Low’s email.

“The topics outlined in the email were discussed between Najib and Idris,” he said, adding that Najib had stuck to the email directions.

Azmi then testified that in the meeting, Johan had asked Najib if he had known about Bridge Global and Brazen Sky, to which Najib replied that he knew about the investments.

“Najib then asked Johan why he was suspicious over the underlying assets of the investments when BSI themselves had given a statement of the investments,” he said.

“Najib told Johan that he wished to see KPMG close the audit report for 1MDB’s financial statements before Dec 31, 2013,” he added.

Azmi also testified that as CFO, the duties of liaising with the auditors and providing them with adequate information fell under his job scope; however, during the meeting, Najib had answered all of KPMG’s queries through Jho Low’s talking points.

“In this situation, although I am the CFO of the company, and as the CFO the audit is under my supervision; Jho Low had arranged that all of the documentation and talking points were given to Najib so that he answered KPMG’s queries,” Azmi said.

Testifying before Justice Datuk Collin Lawrence Sequerah, Azmi said KPMG still refused to close the audit as they were not satisfied with the answers given by 1MDB and Najib.

“Not long after, KPMG was replaced by Deloitte. To my knowledge, this was brought up at a management meeting and it was agreed that KPMG would be replaced by Deloitte,” he said.

On Monday, Hazem, who took the witness stand, admitted that he had replaced KPMG with Deloitte about two weeks after Najib’s meeting with KPMG. He said he was facing pressure from Jho Low and Najib to close the 2013 accounts and “had no choice” but to change auditors.

Najib has been charged with four counts of abuse of power to enrich himself with RM2.3 billion from 1MDB, and 21 counts of money laundering for the same amount.

He faces up to 20 years' imprisonment if convicted.

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Najib believed to have sanctioned use of US$3b from 1MDB funds for other purposes, court told

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