1MDB Audit Trial: Day Two

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The controversial events which eventually contributed to the collapse of the BN government under Najib in GE14.

  • Former AG Gani removed as Najib lost trust in him
  • Muhyiddin removed because he had been kicking up a storm about 1MDB
  • Two conflicting versions of the 1MDB financial reports for 2014 removed from audit report
  • Dzulkifli Ahmad, who later became the MACC chief, viewed the issue of 1MTN bonds as business decisions and the issue was removed from the audit report

The former top civil servant in the country yesterday revealed the intrigues behind events which led to the removal of former deputy prime minister Tan Sri Muhyiddin Yassin and former Attorney General (AG) Tan Sri Abdul Gani Patail in the wake of the 1Malaysia Development Bhd (1MDB) scandal in 2015.

There was absolute silence in an already quiet courtroom when Tan Sri Ali Hamsa started talking about the controversial events which eventually contributed to the collapse of the Barisan Nasional (BN) government under Datuk Seri Najib Razak in the 14th General Election (GE14).

Ali, who was the chief secretary to the government from 2012 to 2018, was forced to broach the subject when he was questioned by Deputy Public Prosecutor Datuk Seri Gopal Sri Ram in the ongoing trial involving the tampering of the 1MDB audit report.

Najib and co-accused Arul Kanda Kandasamy listened closely from the dock as Sri Ram meticulously took Ali, 64, through a series of questions on Gani and Muhyiddin’s exit from the Najib administration.

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He started off by asking Ali to explain the circumstances that led to Gani’s ouster from office.

Sri Ram: Can you explain the circumstances behind Gani’s leaving office.

Ali: There was no trust in Gani

Sri Ram: Who did not trust him?

Ali: The prime minister…Najib. There was loss of trust in Gani.

Sri Ram: Why was there this loss of trust?

At this point, Ali seemed hesitant to answer but was prodded on by Sri Ram, who said: “Don’t worry…you can speak freely. You are in a court of law.”

Ali then went on to say that at that time Muhyiddin had been kicking up a storm about 1MDB in Cabinet meetings and he was informed that the former deputy prime minister had also met Gani.

Ali: I was informed by the prime minister that Muhyiddin and Gani had coincidentally met at a shopping centre in Kuala Lumpur. That is one thing that may have become an issue (that led to the loss of trust). Muhyiddin was asking a lot of questions about 1MDB.

Previously, media reported that Gani was said to be preparing to frame charges in connection with the troubled 1MBD before he was replaced in 2015.

Sri Ram: You were then the chief secretary to the government. You gave evidence that Muhyiddin asked a lot of questions about 1MDB in Cabinet. He was then removed.

Ali: The act of removing him was not within my jurisdiction. It is up to the PM. Most of the arguments were one-sided. Muhyiddin was making all the noise and we all knew something was coming up.

Asked how Najib reacted to those questions raised by Muhyiddin, Ali said Najib was calm at the cabinet meetings and some answers were given, but some were given by the second finance minister.

Sri Ram: So Gani was asked to leave and Muhyiddin was also removed after he asked questions about 1MDB.

Ali: Yes.

Earlier, Sri Ram also asked Ali how Gani had reacted when he was given the letter of his removal.

Ali said Gani merely responded by saying that he had expected it to happen.

He said the letter of Gani’s removal was drafted by his assistant in Najib’s presence before the then prime minister took it to the Yang di-Pertuan Agong to be signed.

Sri Ram: So how did you come to be the bearer of the bad news?

Ali: I was called by the PM and he said go and give this to Gani. Tell him to vacate and don’t take any documents from the office.

Najib’s decision to shore up his Cabinet happened in 2015 and it was widely reported that detractors, including his deputy who had openly criticised the government’s handling of public funds by 1MDB, were sacked from office.

Muhyiddin was replaced by then Home Minister Datuk Seri Dr Ahmad Zahid Hamidi, who is ironically also sitting in the dock facing corruption charges one floor below this court where Najib’s trial is taking place.

Gani, meanwhile, was replaced as AG and the government had then cited the latter’s ill health behind his removal.

Prior to that Gani had led a high-level probe into allegations that money linked to 1MDB was deposited in Najib’s personal account.

However, his successor Tan Sri Mohamed Apandi Ali – who is now the Umno disciplinary board chairman – had cleared Najib of any criminal wrongdoing.

Najib subsequently explained the Cabinet reshuffle by saying that while he could accept differences of opinion and criticism as part of the decision-making process, Cabinet ministers should not air their differing views in public forums as it could negatively impact the perception of the government and nation.

The High Court yesterday also heard how Najib had instructed that certain portions of the 1MDB audit report be removed before it was presented to the parliamentary Public Accounts Committee (PAC) in 2016.

Ali 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 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, 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.

Ali said that the Feb 24 meeting also discussed the issue of 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.

Ali said the meeting also discussed the issue relating to the delay in the issuance of IMTN bonds with the government guarantee and Shukry questioned whether Najib was duty bound to report it in the Cabinet meeting after obtaining the approval from Yang di-Pertuan Agong.

“In response to this, Arul Kanda said his view is that the issues pertaining to the issuance of the IMTN are business decisions.

“A representative from Attorney-General’s Chambers, Datuk Dzulkifli Ahmad, also had the same view (as Arul Kanda) and Ambrin then agreed to have that issue removed from the audit report,” Ali said, adding that the final issue that was removed was on the agreement between Country Group Securities Thailand and ACME Time Limited.

Dzulkifli later became the MACC chief.

Ali confirmed that Tan Sri Abu Kassim Mohamed was the MACC chief at the time of the February 2016 meeting, but said the latter was subsequently placed elsewhere.

“Tan Sri Abu Kassim wanted to take leave after his backache and he wanted to be placed somewhere else, so we placed him in UiTM,” Ali said.

Ali said he had in an “unofficial” conversation suggested to Najib that one of Abu Kassim’s deputies could take over the MACC chief post, adding that Najib had then said he “would consider” the recommendation.

Noting that the prime minister has the prerogative to recommend the candidate for the MACC chief position to the Yang di-Pertuan Agong, Ali confirmed that Dzulkifli was eventually appointed.

Sri Ram: Is it the same Datuk Dzulkifli who attended the meeting and gave the opinion?

Ali: Yes.

On July 29, 2016, Ali had announced on behalf of the government a series of appointments and transfers, including Abu Kassim’s ceasing to be the MACC chief on August 1.

Ali had also announced the AGC’s Dzulkifli as the replacement to Abu Kassim with effect from August 1, 2016, also saying that Dzulkifli would hold the position as the MACC chief until July 31, 2021.

Following the defeat of the BN coalition which was led by Najib in the 14th general elections, Dzulkifli’s role as MACC chief ended on May 14, 2018, after he reportedly sent in his resignation letter.

Najib is accused of ordering the 1MDB audit report to be tampered before it was presented to the Public Accounts Committee (PAC) in 2016.

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He is charged with using his office or position for gratification, an offence under Section 23 of the Malaysian Anti-Corruption Act 2009.

He faces up to 20-years jail and fine, if convicted.

Arul Kanda is charged with abetting Najib and faces the same penalties if convicted.

The trial before justice Mohamed Zaini Mazlan continues.

Earlier report: Nov 19, 1MDB Audit Trial: Day One