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This article first appeared in The Edge Malaysia Weekly on November 25, 2019 - December 1, 2019

IN an unusual and unprecedented move, a copy of the National Audit Department’s (NAD) audit of 1MDB was presented to five top government officials and former prime minister Datuk Seri Najib Razak even before it was presented to the Public Accounts Committee (PAC) of parliament looking into the activities of the state-owned entity, the High Court heard last week.

NAD director Nor Salwani Muhammad testified that on Feb 22, 2016, the copies of the report were sent to the six individuals for some sort of vetting, a move she described as “unusual” as normally, after an exit conference — a session where issues raised in the audit observations by the auditors and previously submitted to the auditee (in this case, 1MDB) are discussed and answered by the auditee — a final report of the audit will be prepared to be submitted to the PAC. She did not explain why the usual practice had not been adhered to.

But on reading the report, a displeased Najib immediately summoned chief secretary to the government Tan Sri Ali Hamsa to express his dissatisfaction with the contents of the audit report. Ali was asked to convene a meeting with four individuals — Najib’s chief private secretary Tan Sri Shukry Mohd Salleh, Attorney-General’s Chambers officer Tan Sri Dzulkifli Ahmad and 1MDB’s then CEO Arul Kanda Kandasamy.

“The purpose of the meeting was for the 1MDB audit report as he (Najib) was not satisfied with its contents,” Ali testified last week, adding that he did not know at the time what the problems were.

Following the prime minister’s orders, Ali coordinated a meeting two days later between the NAD and Arul Kanda, together with the initial recipients of the report, to resolve the issue by removing parts that were purportedly not in favour of Najib (see  “The ‘tampered’ paragraphs”). The meeting on Feb 24 was the date the report was supposed to have been submitted to the PAC under a previous schedule.

The final “amended” report was eventually submitted to the PAC on March 4, 2016.

“Never before in my 21 years of working there have we been faced with an occasion like this, where the final audit report was asked to be digugurkan (dropped) and called for it to be dilupuskan (destroyed). This has never happened before and for this reason, my team and I were shocked,” Nor Salwani testified as to the outcome of the meeting.

Even though she was ordered to destroy all 60 copies of the reports, Nor Salwani said she kept a copy bearing the watermark 09 for “reference” purposes, noting that the other copies with the watermark numbers of 01, 02, 04, 05 and 06 were not returned by the recipients to the NAD to be destroyed.

The 09 copy was subsequently given to Tan Sri Madinah Mohamad, who succeeded Tan Sri Ambrin Buang as auditor-general on Feb 23, 2017, to enable the new auditor-general to get a full picture of the findings of the audit, Nor Salwani said of the department’s presentation of the report to Madinah on March 27, 2017.

Following public disquiet of 1MDB’s mounting debt, the Cabinet decided at a meeting on March 4, 2015, that the NAD was to verify 1MDB’s account and submit a report to the PAC.

Ambrin testified that the audit was done based on the mandate of the Cabinet and the PAC to verify the audited financial statements of 1MDB and evaluate if the financial performance and activities of 1MDB were still in line with the company’s original objectives, which are:

•     Investing in projects that can help drive strategic initiatives for long-term sustainable development and encourage foreign direct investment inflows into the country; and

•     Utilising existing sovereign wealth fund networks in the Middle East and China to bring in foreign direct investment that is suitable for national projects.

 

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