‘Jho Low and Najib blocked audit’

An audit on 1Malaysia Development Bhd (1MDB) in 2010 would have revealed that the troubled sovereign wealth fund had transferred US$700mil (RM2.9bil) to Good Star Ltd, a company owned and controlled by Low Taek Jho.

(The Star) – But Low and Datuk Seri Najib Razak did not allow this to happen as the National Audit Department was essentially not authorised to conduct an audit and due diligence on 1MDB.

Ernst & Young, one of the Big Four accounting firms, was appointed instead on the recommendation of Low’s close associate Casey Tang.

Testifying before Justice Collin Lawrence Sequerah during cross examination by lead prosecutor Datuk Seri Gopal Sri Ram, former 1MDB CEO Datuk Shahrol Azral Ibrahim Halmi (pic) said Low told him that an audit by the National Audit Department could present a political risk to Najib.

The letter was copied to then Auditor-General Tan Sri Ambrin Buang, then Treasury secretary-general Tan Sri Dr Wan Abdul Aziz Wan Abdullah and 1MDB board chairman Tan Sri Che Lodin Wok Kamaruddin.

“The letter stated that the takeover of Terengganu Investment Authority (TIA) to become 1MDB was done on an ‘as is where is’ basis, and due to that it would not have to be audited or have due diligence to be conducted by the National Audit Department anymore.

“I was not involved in the initial discussions about this. But I believe the content of the letter was discussed earlier between Jho Low and Najib.

“Based on what I know now, I’m confident that the takeover of TIA to 1MDB on that basis was planned by Jho Low with the blessings of Najib to hide his misappropriation during the issuance of the RM5bil Islamic Medium Term Notes with government guarantee in May 2009, ” Shahrol told the High Court.

“The audit into 1MDB would have revealed that US$1bil was invested into its joint venture with PetroSaudi International (PSI), out of which only US$300mil went into the JV company and US$700mil went into Good Star Ltd, which at that time was purportedly a subsidiary of PSI.”

After learning that the audit could present a political risk to Najib, Shahrol said he sought further advice on what to do next.

Sri Ram: From who?

Shahrol: From the shareholder i.e. Najib via Jho Low.

Sri Ram: So you asked Jho Low to get the accused’s views on this?

Shahrol: To tell us what to do.

Sri Ram: What was the message that came back?

Shahrol: That there is no need for due diligence or audit exercises as we are appointing or already appointed Ernst & Young and we will submit the audited report to MoF Inc once ready.

Sri Ram: Now what was the reason to copy the letter to the Auditor-General?

Shahrol: I was advised to copy the letter to the Auditor-General (interrupted)…

Sri Ram: By whom?

Shahrol: By Jho Low. To ensure the Auditor-General knows the decision of the board chaired by the prime minister and that there was no audit required.

A letter from Najib to Shahrol dated Dec 22,2009 stated that the former agreed with the decision of the 1MDB board of directors that the company should be audited by professional external auditors appointed by the board and there was no need for the Auditor-General to audit 1MDB.

The National Audit Department wrote to 1MDB in October 2010, requesting for additional documents involved in the audit to determine 1MDB’s contingent liabilities.

Meanwhile, the High Court also heard that a meeting held at Najib’s house in Jalan Langgak Duta on the evening of Oct 16,2009 was to formalise minutes of a meeting that was pre-prepared by Low.

Shahrol also said that Low was far more effective at setting up a meeting with Najib as compared to Najib’s own officers.

He added that on Sept 16,2009, the deliberate issuance of shareholder minutes by Najib was to protect himself from any allegations of misappropriation, and to place full responsibility on the board of directors.

Shahrol said he only realised this when investigations into 1MDB were exposed.

The High Court was also told that the name 1MDB was initially not allowed by the Companies Commission of Malaysia due to controlled words, but a letter of support from Najib pushed this through.