KUALA LUMPUR: The High Court today heard how Datuk Seri Najib Razak had instructed that certain portions of the 1Malaysia Development Bhd (1MDB) audit report be removed before it was presented to the parliamentary Public Accounts Committee (PAC) in 2016.
Former chief secretary to the government, Tan Sri Ali Hamsa, said Najib had given the instruction to him and the then-Auditor-General Tan Sri Amrin Buang after they were summoned to his office on Feb 22, 2016.
"During the meeting, Najib informed us that he was not satisfied with the contents of the 1MDB audit report which was going to be presented to the PAC.
"He mentioned that he did not want two different financial statements for 1MDB to be submitted in the report. At that time, I did not know what the problem was with the annual statement submitted in the report," he said.
Ali, who is the fourth witness to be called in the trial involving Najib and former 1MDB chief executive Arul Kanda Kandasamy who are accused of tampering with 1MDB's audit report, said that after the meeting he was instructed to call for a coordination meeting between the National Audit Department and Arul Kanda to sort out the issue.
"I was also instructed not to print the 1MDB audit report until I had his (Najib's) approval," Ali said, adding that he subsequently instructed his senior private secretary to organise a meeting involving representatives from 1MDB, the National Audit Department, the Treasury, the Attorney General's Chambers and the Prime Minister's Office.
Ali said he met Amrin and a private secretary to the Prime Minister, Tan Sri Shukry Mohd Salleh on Feb 23, when Shukry informed them that the 1MDB audit report had become a crisis which needed to be handled immediately.
He said on the following day, a meeting involving all the parties was held but no minutes were recorded.
"I informed everyone present that the meeting was held on the instructions of Datuk Seri Najib who wanted coordination on the 1MDB audit report.
"I then left them to discuss the issues and these were all discussed one by one. They were then addressed by Arul Kanda."
Ali said Arul Kanda had voiced his disapproval on various matters in the 1MDB report by the National Audit Department.
"He argued that matters raised in the report were not factual but mere hearsay.
"He insisted that they should not be in the report. He also insisted that the 1MDB audit report prepared by the National Audit Department be in accordance with what he wanted. I then asked Tan Sri Amrin to answer and reason on the matters raised by Arul Kanda."
Ali said Amrin had then mentioned that there were difficulties faced by the 1MDB audit team throughout the audit process.
He said Amrin also brought up issues on the two different versions of 1MDB's financial statements for 2014.
"I asked Arul Kanda to explain and he admitted that there were two different versions of the financial statements.
"He insisted that the conflicting versions should not be included in the 1MDB report and asked for a police investigation to be conducted."
Ali said it was agreed at the meeting that the Ministry of Finance Incorporated (MOF Inc) would lodge a police report.
However, he said for some reason, the report was never lodged.
At this juncture, lead prosecutor Datuk Seri Gopal Sri Ram said the prosecution will also be calling Amrin to testify.
Ali then continued and said he wanted a police report to be lodged so that the authorities could investigate whether there were elements of fraud or concealment of facts with regard to the 2014 1MDB financial statement.
"At that time, there were no objections towards my instructions. In fact, the representative from the Treasury promised to form a special committee to take follow up actions on the issue. After that, Tan Sri Amrin agreed to remove the issue from the 1MDB audit report," Ali said.
The 64-year-old, who has since retired from the civil service, said that the Feb 24 meeting also discussed the issue of fugitive Low Taek Jho @ Jho Low's presence at the 1MDB board of directors meeting.
He said the issue was addressed in the audit report because the National Audit Department's due diligence found that Low did not hold any position nor played any role in 1MDB.
"Therefore, his presence in the meeting was viewed as a red flag.
"However, Tan Sri Shukry requested for this issue to be removed from the audit report. He said we needed to take into account the sensitivity of the matter and to prevent it from being manipulated by the Opposition party at that time."
Ali said Amrin subsequently agreed that it should be removed.
He said in the end, four issues were removed from the 1MDB audit report, including the two conflicting versions of the 1MDB financial statements for 2014 and the presence of Jho Low in the 1MDB board of directors meeting.
The trial before justice Mohamed Zaini Mazlan continues.
Najib, 66, is accused of ordering the 1MDB audit report to be tampered with before it was presented to the PAC in 2016.
He is charged with using his office or position for gratification, an offence under Section 23 of the MACC Act 2009.
He faces up to 20 years’ jail and a fine if convicted.
Arul Kanda, who is his co-accused, is charged with abetting Najib and faces the same penalties if convicted.