Ex-1MDB CEO recalls pressure on audit reports by Najib, Jho Low
Mohd Hazem Abdul Rahman Bernama

Mohd Hazem tells KL High Court that Najib pressured him to get 1MDB’s 2013 financial audit report closed

by RAHIMI YUNUS / pic by BERNAMA

FORMER Prime Minister Datuk Seri Mohd Najib Razak and Low Taek Jho, also known as Jho Low, had exerted pressure and power over 1Malaysia Development Bhd (1MDB) management and directors that led to issues with auditors and an uninformed loan application, said witness Mohd Hazem Abdul Rahman (picture).

Mohd Hazem told the Kuala Lumpur (KL) High Court that Najib pressured him to get 1MDB’s 2013 financial audit report closed.

The 10th prosecution witness who was the sovereign fund’s CEO said, at the time, KPMG had yet to close the audit report because the audit firm was not satisfied with the documents and answers provided regarding Brazen Sky Ltd’s investments as submitted by BSI Bank (Singapore) Ltd, the fund manager of the account. Brazen Sky was established by Jho Low and managed by his proxy as one of the vehicles to divert 1MDB investment funds in PetroSaudi Oil Services Ltd.

Mohd Hazem said KPMG was supposed to close the 2013 1MDB financial report after considering the reasons given and that Najib, as the shareholder, knew about the Brazen Sky investments.

KPMG, however, was still not satisfied with the documents and answers provided.

“Because of pressure from Najib to close the 1MDB account and the company’s reputation, the management suggested to members of the board of directors and shareholders to replace KPMG with Deloitte.

“The decision was made because I faced pressure from various parties, mainly from Najib who contacted me several times through my mobile phone to ensure the 2013 1MDB financial audit report was closed,” Mohd Hazem said at the KL High Court earlier this week.

Mohd Hazem said KPMG was terminated and replaced by Messrs Deloitte KassimChan, and Deloitte also closed the 1MDB account for the financial year of 2013.

However, the issues with Brazen Sky continued in 2014 as Deloitte put pressure on the management to prove or explain again in detail about the investments, or if 1MDB fails to do that, the company must liquidate Brazen Sky investments and repatriate the money to Malaysia.

Mohd Hazem added that he informed Jho Low about the matter and Jho Low made plans to liquidate Brazen Sky’s investments, which by the end of 2014, only US$1.3 billion (RM5.4 billion) from the US$2.3 billion were brought back to Malaysia.

Apart from the auditors’ issues, Mohd Hazem also told the court that Najib approved a US$975 million loan without his knowledge to buy back 1MDB’s shares in Aabar Investment PJS in 2014.

As the CEO, the witness said he was not informed of the additional loan drawn from Deutsche Bank AG and only learned about the matter after receiving an email from Jho Low. He also said then 1MDB CFO Azmi Tahir was also not aware of the loan proposal made by Jho Low.

“I received the email from Jho Low on his plan to take out an additional loan totalling US$975 million from Deutsche Bank AG to settle his previous loan of US$250 million.

“The balance will be used to settle the outstanding amount for the termination of Aabar options. Jho Low also emailed me his plan of action titled, ‘Final Decisions on 1MDB Energy Group IPO’,” Mohd Hazem said.

After months of becoming the CEO, Mohd Hazem said he wanted to resign and concluded that 1MDB was the “biggest trap in Malaysia’s corporate history”.

Mohd Hazem, who was appointed as 1MDB CEO in March 2013, shared his thoughts with Azmi in September 2013 in an email, saying he wanted to leave the company.

“I feel obliged to tell you that this email (Jho Low’s email) would further confirm my decision that I should leave the company. I don’t think I can deliver as per the below email and I don’t even think it is realistic for anyone to achieve, in the face of the significant outcry from the public,” he said in the email.

In that email, he also asked if Azmi was interested to replace him as the CEO.

“If you are interested in the job, I will recommend you for it to him (Jho Low) but let me know if you decide otherwise. My advice though, as a friend, is a no (hahaha),” he said in the email.

Mohd Hazem wrote that after he received an email from Jho Low outlining 1MDB investments, financing plans and also his role at the company.

He raised concerns about 1MDB plans and how figures provided by Jho Low were “back of an envelope” calculations that did not take into consideration the implications on the stakeholders and the public.

Najib is facing 25 charges in the 1MDB trial — four counts of power abuse to obtain gratifications totalling RM2.3 billion and 21 counts of money laundering involving the same proceeds.