PUTRAJAYA (Feb 25): Former 1Malaysia Development Bhd (1MDB) chairman Tan Sri Lodin Wok Kamaruddin said that Datuk Seri Najib Razak did not "intimidate" auditors from KPMG to close the troubled strategic development firm's pending audit statement.

Testifying in the ongoing 1MDB-Tanore trial, Lodin, who is the 12th defence witness, said that in his view, the then-prime minister had made a "polite request" for a resolution over the statement dated March 31, 2013.

Defence counsel Wan Azwan Aiman Wan Fakhruddin: What do you have to say about [former KPMG managing partner] Datuk Johan Idris’ claim that
[Najib] intimidated him when [Najib] said he “would like to see the accounts signed by Dec 31, 2013”?

Lodin: I viewed it as a polite request by [Najib], rather than intimidation, and this was well reflected in the minutes by Johan.

The 75-year-old also testified that Najib did not instruct the auditors to sign off on the pending accounts, devoid of crucial documents.

"[Najib] merely said he would like to see the accounts signed by Dec 31, 2013, and to facilitate that process, he suggested KPMG to fly to Hong Kong to get the necessary comfort to complete the audit," the witness said.

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 to get the information, company management had insisted that further information related to the investment was confidential.

Johan, who was the prosecution's 14th witness, had testified that the firm was intimidated by Najib into signing off the long-delayed 2013 financial statements. This purportedly happened during a meeting at Najib's private residence in Langgak Duta, Kuala Lumpur.

Johan said that Najib used the words "he would like to" see the matter resolved, which to his mind was a form of instruction and intimidation.

Following the meeting between Najib and Johan, coupled with KPMG's hesitance to sign off on the financial statements, the audit firm received a letter from 1MDB informing the firm that its services as 1MDB'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 had been removed in 2010.

On Tuesday, Lodin added that he, along with then-1MDB director Tan Sri Ismee Ismail, then-chief financial officer Azmi Tahir, and then-chief executive officer Mohd Hazem Abdul Rahman, had been requested by Najib to brief him on the status of the funds during a meeting on Nov 28, 2013.

Lodin said that during the meeting, they were briefed by ex-BSI banker Yak Yew Chee on the structure of the funds and "provided assurance that the entire US$2.3 billion was intact" in the bank's custody.

When asked if he was satisfied with Yak's assurance, Lodin answered, "There was nothing to prompt my suspicion of his assurance."

The witness went on to testify that he had also attended the meeting between Najib and Johan. Hazem and Azmi were also present.

Testifying in his defence previously, Najib insisted that he wanted the matter resolved, but not at the expense of abandoning good accounting principles.

Lodin was appointed as a board member in September 2009, and served on the board until his resignation in May 2016. He took over as the chairman of 1MDB, after Tan Sri Mohd Bakke Salleh resigned in protest over the company's glaring mismanagement.

Lodin served as the CEO of Lembaga Tabung Angkatan Tentera (LTAT) for 36 years before stepping down in September 2018.

He was also appointed as the group managing director of LTAT's flagship company Boustead Holdings Bhd in 1991, and also served as the company's deputy chairman since 2010. He left his posts in December 2018.

In this trial, Najib is accused of four abuse of power and 21 money-laundering charges.  

Presiding judge Datuk Collin Lawrence Sequerah had ordered the former finance minister to enter his defence for all charges, after finding that the prosecution had established a prima facie case against him.

The trial continues on Wednesday.

Read also:
1MDB-Tanore Trial: Najib wanted KPMG to sign off on 1mdb audit, said information sought on Brazen Sky was confidential
Najib intimidated KPMG into signing off 1MDB 2013 financial report, says witness
1MDB-Tanore: Najib says didn't intimidate KPMG auditor
Najib says not in his nature to intimidate people
Lodin to vacate four top posts at Boustead Holdings, related firms