Najib: 1MDB insisted on removing KPMG as auditor

1MDB TRIAL | Najib Abdul Razak denied having compelled 1MDB to remove KPMG as auditor of the sovereign wealth fund's accounts, the Kuala Lumpur High Court heard today.

The former prime minister testified that 1MDB's board of directors were the ones who sought to drop KPMG for rival auditor Deloitte in December 2013.

Najib rubbished the prosecution's contention that he pressured the Minister of Finance Incorporated-owned fund to jettison KPMG.

"That allegation is preposterous because there was a letter by 1MDB explaining the justification for the removal of KPMG and the appointment of Deloitte KassimChan to replace KPMG as the company’s auditor," Najib testified during this afternoon's RM2.27 billion 1MDB abuse of power and money laundering trial against him.

The former premier pointed out that the prosecution's evidence, namely a 1MDB board meeting minutes dated Nov 11, 2013, showed the fund's board complained that KPMG had yet to commence an audit on its investment in Bridge Global Absolute Return Fund.

During proceedings, Najib noted that the deadline for the audit was March 31, 2013.

"From the minuted discussion it appears that the board of directors were not entirely happy with how KPMG was approaching the audit exercise conducted.

"Further, from my recollection of the meeting with (KPMG auditor) Johan Idris on Dec 16, 2013, (1MDB's then-director Che) Lodin (Wok Kamaruddin), who was also a member of the board's audit and risk management committee, was quite unhappy and commented that KPMG was being unfair in ‘requesting for something which 1MDB could not provide’," the former Pekan MP told trial judge Collin Lawrence Sequerah.

Previous proceedings

During previous trial proceedings, KPMG managing partner Johan testified on his impression of Najib’s request during a meeting at the former finance minister’s residence at Jalan Langgak Duta, Kuala Lumpur, on Dec 15, 2013.

The 14th prosecution witness said Najib seemingly intimidated the auditing firm into signing off on 1MDB’s 2013 financial statement.

On Oct 30, the criminal court ordered Najib to enter his defence over four abuse of power and 21 money laundering charges involving RM2.27 billion of funds from 1MDB.

Sequerah ruled that the prosecution succeeded in establishing a prima facie (answerable) case against Najib over the Minister of Finance Incorporated’s (MOF Inc) wholly owned company.

The judge ruled that Najib had to answer the charges due to the strength of the various 50 witness testimonies during the prosecution stage of proceedings that lasted six years since the trial began in 2019. The accused was first charged in 2018.

Najib is serving a six-year jail sentence over a separate abuse of power case involving RM42 million of funds from SRC International, a former subsidiary of 1MDB.

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