Kuala Lumpur: A former chairman of 1Malaysia Development Berhad (1MDB) testified in the High Court today that KPMG acted unfairly towards the company by requesting additional documents related to a USD2.3 billion investment in Brazen Sky Ltd in Hong Kong, which subsequently delayed the finalisation of 1MDB’s 2013 financial statement. Tan Sri Che Lodin Wok Kamaruddin, 75, stated that KPMG’s refusal to approve the financial statement stemmed from its disagreement with the 1MDB board of directors’ proposal for the auditors to travel to Hong Kong to verify the investment.
According to BERNAMA News Agency, Che Lodin explained that the delay and disagreement arose over the auditing process. He was responding to cross-examination by deputy public prosecutor Kamal Baharin Omar at former prime minister Datuk Seri Najib Tun Razak’s trial for allegedly misappropriating RM2.3 billion in 1MDB funds. Kamal Baharin suggested that the additional documents requested by KPMG must have been of significant importance, as the auditors withheld approval of the 2013 financial statement.
Che Lodin responded that KPMG may have had its own specific requirements that were not necessarily standard industry practice. He remarked, “We have all the reports from BSI Bank about the USD2.3 billion investment in Brazen Sky. Maybe their standards are unique.” He further noted that when Deloitte replaced KPMG, they were satisfied to sign off on the financial statement, implying KPMG’s requests might have exceeded typical audit requirements.
The witness confirmed a meeting took place on Dec 31, 2013, at Najib’s residence in Langgak Duta, which was attended by KPMG representatives, including then-managing partner Datuk Johan Idris. During the cross-examination, Che Lodin admitted to not being fully aware of the specific documents requested by KPMG, stating, “I’m not an accountant or an auditor, so I’m not too familiar with what they wanted.”
KPMG’s refusal to sign off on the financial statement ultimately led to its removal as 1MDB’s auditor by the board of directors, with Deloitte taking over the role. On Oct 30 of last year, Judge Datuk Collin Lawrence Sequerah ordered Najib to enter his defence after ruling that the prosecution had established a prima facie case against him. Najib, 71, faces 25 charges, including four counts of abusing his position to accept RM2.3 billion in bribes from 1MDB funds and 21 charges of money laundering involving the same amount. The hearing resumes tomorrow.