1MDB auditor: Arul Kanda claimed to represent Ali Hamsa during meet to change audit report contents

Ida Lim
Former 1MDB CEO Arul Kanda Kandasamy is pictured at the Kuala Lumpur Court Complex November 27, 2019. ― Picture by Hari Anggara
Former 1MDB CEO Arul Kanda Kandasamy is pictured at the Kuala Lumpur Court Complex November 27, 2019. ― Picture by Hari Anggara

KUALA LUMPUR, Jan 13 — Then 1Malaysia Development Berhad (1MDB) CEO Arul Kanda Kandasamy had claimed to be the representative of then chief secretary to the government Tan Sri Ali Hamsa during a 2016 meeting where Arul Kanda requested for changes to the final 1MDB audit report, the High Court heard today.

Saadatul Nafisah Bashir Ahmad, who was the leader of the National Audit Department’s (NAD) special 1MDB audit team, said she had attended the February 25, 2016 meeting that was held in a meeting room in Ali’s office.

“When I together with NAD representatives entered that room, Arul Kanda was already in that room and he said he represented Tan Sri Ali Hamsa,” she told the court while testifying as the seventh prosecution witness against Arul Kanda and former prime minister Datuk Seri Najib Razak.

The meetings

Former prime minister Datuk Seri Najib Razak arrives at the Kuala Lumpur High Court January 13, 2020. — Picture by Miera Zulyana
Former prime minister Datuk Seri Najib Razak arrives at the Kuala Lumpur High Court January 13, 2020. — Picture by Miera Zulyana

The February 25, 2016 meeting was one of a series of meeting that took place, after Najib on February 22, 2016 expressed his dissatisfaction with the final 1MDB audit report and requested for changes.

Although the final audit report was completed and ready to be presented by the 1MDB audit team to parliamentary watchdog Public Accounts Committee (PAC) on the scheduled date of February 24, 2016, the presentation did not take place on that date but instead only took place on March 4 and March 7, 2016 due to the delays caused by multiple requests for changes.

Following a February 24, 2016 meeting chaired by Ali and which included Arul Kanda and high-ranking government officials, the special 1MDB audit team agreed to remove several items from the report — including the existence of two conflicting 1MDB financial statements for 2014 and Najib’s failure to relay information on 1MDB bonds to the Cabinet.

Limiting SRC info

The February 25, 2016 meeting was where Arul Kanda asked the 1MDB auditors to limit the final 1MDB audit report’s scope on SRC International Sdn Bhd to the period from January 7, 2011 (when SRC was formed under 1MDB) to February 15, 2012 (when SRC was transferred to come directly under the Finance Ministry’s ownership), instead of including information up until 2014.

Saadatul Nafisah said Arul Kanda had noted that 1MDB was no longer responsible to monitor SRC’s operations after its ownership transfer to the Finance Ministry, and that he had also highlighted that NAD had obtained all related documents from the Finance Ministry instead of from 1MDB.

It was also only during this meeting that Arul Kanda had provided three additional documents that NAD had been seeking for since it started auditing 1MDB, she said.

She said NAD did not make any decision on the dropping of the related SRC content in the report during this meeting, and that a separate meeting was held at 2.30pm on the same day in another meeting room in Ali’s office.

In the second meeting on February 25, Ali chaired the meeting that was also attended by Arul Kanda, Ali’s own aide Datuk Norazman Ayob, Najib’s aide Tan Sri Shukry Mohd Salleh, Ambrin, Saadatul Nafisah herself and senior Finance Ministry official Datuk Seri Mohmad Isa Hussein.

Saadatul Nafisah said she and Ambrin had later upon their return to NAD’s office discussed the matter with the special 1MDB audit team, with Ambrin later agreeing to limit the scope of the report’s contents on SRC International to February 15, 2012 as it eased to be a 1MDB subsidiary after the ownership transfer and as such matters would be audited during the NAD’s audit on companies under the Minister of Finance (MoF) Inc.

Arul Kanda’s emails

Saadatul Nafisah Bashir Ahmad leaves the Kuala Lumpur High Court January 13, 2020. — Picture by Miera Zulyana
Saadatul Nafisah Bashir Ahmad leaves the Kuala Lumpur High Court January 13, 2020. — Picture by Miera Zulyana

Saadatul Nafisah today said Arul Kanda had on February 26 and February 27, 2016 sent her emails containing his new proposal for information to be added into the final 1MDB audit report.

She said however that the 1MDB audit team did not take into account these suggestions by Arul Kanda, as the deadline for 1MDB to provide any suggestions or supporting documents ended on January 30, 2016.

But she also highlighted two of the suggestions made by Arul Kanda, noting that both however were not supported by any evidence or documents, and that this alone would be the reason why NAD would not have accepted one of these suggestions even if it came in before January 30, 2016.

Arul Kanda’s request on word choices

Former chief secretary to the government Tan Sri Ali Hamsa is pictured at the Kuala Lumpur High Court November 20, 2019. — Picture by Yusof Mat Isa
Former chief secretary to the government Tan Sri Ali Hamsa is pictured at the Kuala Lumpur High Court November 20, 2019. — Picture by Yusof Mat Isa

After a copy of the final audit report incorporating the amendments were given to Ali’s aide on February 29, 2016 on the request of Ali’s aide and as authorised by Ambrin, Saadatul Nafisah said yet another meeting was held.

In this final meeting on March 1, 2016 at 10am in Ali’s office and chaired by Ali, Saadatul Nafisah was present with the leaders of 1MDB audit sub-teams, while Arul Kanda also attended.

In the March 1, 2016 meeting, Arul Kanda had asked for more items to be removed from the final 1MDB audit report, mostly revolving around requests to change the use of words that were allegedly seen as “subjective” and not backed by strong evidence.

But Saadatul Nafisah said the auditors were puzzled by Arul Kanda’s actions in scrutinising each item in the audit report at this point in time, when he had already been given the chance to voice out during a December 16, 2015 exit conference and had missed the previous deadline to give additional information.

While noting that Arul Kanda had already given his explanations on several 1MDB matters along with supporting documents during the December 2015 meeting, she said he had still asked the auditors to amend words in the final audit report during the March 2016 meeting.

“The NAD however did not agree to Arul Kanda’s request at that time as 1MDB had already been given time until the end of January 2016 for 1MDB to scrutinise and give feedback together with related documents for that purpose that is after the exit conference (December 16, 2015). But, Arul Kanda did not give any feedback until January 30, 2016.

“During the period given by NAD to 1MDB that is one month after the exit conference (January 30, 2016), there were no documents or explanation made by 1MDB.

“The NAD considers 1MDB to have agreed with the final audit report and that report was finalised,” she said.

In the end, the final 1MDB audit report that had four items removed and had a smaller scope on SRC International’s matters was sent for printing at 6pm on March 1, 2016 and fully printed early the next morning.

Instead of the initial February 24, 2016 presentation date scheduled, the NAD then presented its 1MDB audit findings to the PAC on March 4 and March 7, 2016.

Today is the seventh day of the trial that is being heard before High Court judge Mohamed Zaini Mazlan, with the trial set to resume tomorrow afternoon.

In this trial, Najib was charged with abusing his position as prime minister and finance minister to order amendments in February 2016 to the auditor-general’s audit report on 1MDB before its presentation to Parliament’s Public Accounts Committee to avoid any civil or criminal action against him, while Arul Kanda was charged with abetting Najib in the report’s tampering.


 

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