Email reveals plan to conceal 1MDB losses from Najib

(TMI) – The prosecution’s ninth witness, former 1Malaysia Development Bhd CEO Shahrol Azral Ibrahim Halmi, returns to the stand on the 32nd day of Najib Razak’s trial.

Lead defence counsel Muhammad Shafee Abdullah is expected to cross-examine Shahrol today on 1MDB’s RM2.5 billion loan facility agreement with AmBank in 2010.

Yesterday, Shahrol testified that in mid-2010, 1MDB’s board of directors sought advice from Najib, who was then chairman of the advisory board, on whether the state investor should get involved in another joint venture with PetroSaudi International.

The board wanted Najib’s views on whether US$1 billion funds should be injected into a joint venture company, which would purchase 4.23% stake in the French energy firm GDF Suez, Shahrol said.

In the earlier deal, US$300 million was paid to PetroSaudi Holdings (Cayman) Ltd and US$700 million to Good Star Ltd on September 30, 2009, without the board’s approval.

Investigators later revealed them to be sham companies, with Good Star controlled by fugitive financier Low Taek Jho, or better known as Jho Low.

The board later abandoned the plan in favour of putting up US$500 million for a murabaha financing agreement with PSI, which was to give 1MDB a return of 8.25% per annum.

Shahrol also verified that in May 2011, a further sum of US$330 million, which was supposed to be the second tranche of the investment into the murabaha financing, was instead diverted to Good Star Ltd.

The witness said that PSI’s debt to 1MDB was around US$2.2 billion as of 2015 and was never settled.

Former prime minister Najib, 66, is on trial on four counts of power abuse to enrich himself with RM2.3 billion from 1MDB and 21 counts of laundering the same amount.

Prosecutors have accused him of conspiring with the Penang-born Low to defraud the state investor.

Najib is represented by a dozen lawyers. Former Federal Court judge Gopal Sri Ram leads the prosecution before judge Collin Lawrence Sequerah.



3.07pm: Shafee tells the judge that he will ask one last question.

Shafee: From the email, (do you agree that) the conversation was (about) trying to cover up (the losses) and mislead the (then) prime minister?

Shahrol: From the email, it seems that they were trying to mislead the (then) prime minister.

3.05pm: Shafee suggests that they were supposed to tell Najib that the joint venture was doing well, therefore, they could get more money.

Shahrol says he does not know.

Sequerah tells Shafee that the witness was not privy to the matter.

The lawyer continues his questioning, but Shahrol says he is not comfortable making comments as he has no personal knowledge of the matter.

3.03pm: Shafee suggests that they had misused US$1 billion from 1MDB and kept the money they made. Shahrol says he does not know.

2.58pm: Shafee asks Shahrol about the US$500 million loss. Shahrol says he does not know about the sum being referred to.

The witness says he is not comfortable commenting on the email as he “was not there” and “had no idea” what was being talked about.

2.52pm: They tried to explain to Najib about the 1MDB-PSI joint venture, which was on shaky ground, and Low and his partners were seeking another US$500 million from 1MDB, the court is told.

In the email, Obaid was instructed to tell Najib that they had good investment prospects, and they needed the money quickly.

They also suggested that the losses not be discussed with the then prime minister, as “(he) thinks we’re making good investments”.

2.48pm: Shafee is referring to an email between Tarik Obaid and Patrick Mahoney that was published by The Edge.

The lawyer says the email was disclosed by Xavier Andre Justo.

Mahoney sent the email on August 7, 2010, telling Obaid that the former had held a meeting with Low and they both came up with a list of things to tell Najib, the court hears.

It was decided that they would hide from him the fact that 1MDB would have to take a US$500 million loss. Instead, they would impress upon Najib how important it was for the state investor to quickly invest another US$500 million with them.

2.46pm: Sequerah asks Shafee how long he has left with the witness.

Sequerah: Are you halfway through? Three-quarters through?

Shafee: We haven’t yet come to the Tanore part. There are a lot of documents. I’m more than halfway done. I suspect we won’t finish next week.

Sequerah: My dates are filling up.

Shafee: We’ll just go on and take it from there. As you can appreciate, in the witness statement, every sentence is loaded. (The cross-examination of this) witness is long, but the next few witnesses won’t be long, because we are putting forward everything to this witness, as he was the CEO.

2.36pm: Trial resumes. Shahrol takes his oath.

12.39pm: Court breaks for lunch.

12.03pm: Shafee goes through the money flow into PSI by marking documents.

Shahrol says he doesn’t know if the money was used to purchase shares in GDF Suez.

11.43am: Court is in session.

Shafee goes through a transaction where 82 million Swiss francs were transferred from Tarak Obaid’s account to Good Star Ltd.

10.53am: MIC deputy president M. Saravanan is in the public gallery. Court takes a short recess, Najib and Saravanan have gone to the cafeteria.

10.49am: Shahrol says until today, he does not know how the US$300 million was used from the 1MDB-PSI joint venture.

9.55am: Trial begins.

Shafee tells Sequerah that for next Thursday, he and Sri Ram have matters at other courts. Shafee asks if they could have a later start.

The judge allows it but tells the lawyers that they may have to extend trial hours to 6pm next week.