PUTRAJAYA (Jan 23): The 1Malaysia Development Bhd (1MDB)-Tanore trial revisited the termination of KPMG as the company’s external auditor, with former prime minister Datuk Seri Najib Razak asserting that it was not his "character" to threaten anyone.
Under re-examination by lead defence counsel Tan Sri Muhammad Shafee Abdullah on Thursday, Najib buttressed his testimony from earlier this week that he did not instruct nor intimidate the big-four auditor into closing the pending audit statement of the troubled strategic development firm.
Shafee: Is it in your character to intimidate?
Najib: I am not seen in that light. I believe I don't have that reputation of intimidating people.
KPMG was hesitant to close the audit due to 1MDB's US$2.3 billion investment made through Brazen Sky Ltd in an unknown fund called Bridge Global SPC. The auditors were having difficulty obtaining "evidence on the existence, accuracy, completeness and valuation of the investment".
Despite numerous attempts for more details, 1MDB's management had insisted that further information related to the investment was confidential.
Intimidation
Datuk Johan Idris, a former KPMG managing partner and the prosecution's 14th witness, had testified that the firm was intimidated into signing off the long-delayed 2013 financial statements purportedly during a meeting at Najib’s private residence in Langgak Duta, Kuala Lumpur.
He said that Najib used the words "he would like to" see the matter resolved, which to Johan's mind was a form of instruction and intimidation.
Following the meeting between Najib and Johan, coupled with KPMG's hesitancy to sign off on the financial statements, the audit firm received a letter from 1MDB informing that its services as the company's external auditor were to be terminated immediately.
No reasons were given, although KPMG was informed that Deloitte would be replacing it. KPMG was the second auditor sacked by 1MDB upon pressure from Najib, as it declined to sign off on the investment fund's accounts for the financial year ended March 31, 2013.
KPMG took over the audit job from Ernst & Young, which was terminated in 2010.
In the ongoing 1MDB-Tanore trial on Thursday, Shafee also highlighted there was no indication in the meeting minutes documented by Johan himself that he felt intimidated. Najib said he wouldn't have used the words "I would like" even if he was to give any semblance of instruction.
"I would say 'I want', 'no matter what' (macam mana pun), this account has to be closed before Dec 31," he said.
'Husni to be replaced with Johari Ghani'
Proceedings on Thursday also circled back to former finance minister II Datuk Seri Ahmad Husni Hanadzlah, who had previously testified against his former boss.
On Thursday, Najib said that Husni was involved in 1MDB, without elaborating. Najib also told the court that he wanted Datuk Seri Johari Abdul Ghani, who had broader corporate experience, to replace Husni whose working experience was limited to the banking sector.
In reply to Shafee's suggestion on pliability of character, Najib said that Johari was a "tougher nut" to crack compared to Husni.
A day earlier at the court, Najib said that Husni had turned sour after losing the Tambun parliamentary seat in the general election in 2018. Najib had previously also testified that Husni may have been disgruntled, as Najib wanted to transfer him out of the Ministry of Finance.
Husni had stated on the witness stand that despite several attempts to raise concerns related to 1MDB, Najib told him not to be involved in the company's matters. 1MDB was wholly owned by Minister of Finance Incorporated (MOF Inc), with the then-finance minister as its sole shareholder.
Johari, who was a deputy finance minister, was eventually promoted to become finance minister II, following a Cabinet reshuffle in June 2016.
He is currently the plantation and commodities minister. Johari, whose background is in chartered accounting, is also the chairman of the 1MDB task force committee looking into asset recovery.
In this trial, Najib faces four abuse of power and 21 money-laundering charges.
The trial before presiding judge Datuk Collin Lawrence Sequerah continues on Friday.