1MDB trial: Ex-CEO says state fund was designed to protect Najib from prosecution

Former Malaysian prime minister Najib Razak is greeted by a supporter at the High Court in Kuala Lumpur on Sept 25, 2019.
Former Malaysian prime minister Najib Razak is greeted by a supporter at the High Court in Kuala Lumpur on Sept 25, 2019.PHOTO: EPA-EFE

KUALA LUMPUR - Malaysia's former premier Najib Razak, in the dock for misappropriating billions of dollars from the country via state-owned fund 1MDB, had full knowledge of the investment deals that went awry after it was siphoned off by fugitive financier Jho Low, a key witness testified on Wednesday (Sept 25).

Shahrol Azral Ibrahim Halmi, a former 1Malaysia Development Berhad (1MDB) CEO, told the High Court this week that the state fund was also designed in a way to protect Najib from criminal prosecution.

"Now I realised this minutes of shareholder meeting was issued by Najib to protect him from accusation of misappropriation and shift responsibility to the board of directors," Datuk Shahrol said. He was referring to minutes from the Minister of Finance Incorporated (MoF Inc) that outlined given powers to 1MDB's predecessor Terengganu Investment Authority's (TIA) board to manage large transactions.

TIA became 1MDB in 2009 after the Terengganu state government exited the sovereign fund and the entity was taken up by the federal government and morphed into 1MDB.

As prime minister and finance minister at that time, Najib had full power to appoint members of the 1MDB board of advisers and board of directors, and investment decisions too had to be approved by the premier.

Using his powers as premier, the witness shared that Najib had prevented an audit of 1MDB in 2009.

Mr Shahrol said he was instructed to write a letter on behalf of 1MDB to the premier and Finance Ministry outlining that there was no need for a government audit since accounting firm Ernst & Young was already appointed to do the job.

"He (Jho) reverted back to me saying that an audit of due diligence by the National Audit Department could present a political risk to Najib," the witness said. He said this occurred after he informed Low of MoF Inc's notification of an audit following the transfer of shares from Terengganu to the federal government.

An audit, Mr Shahrol testified, would have shown that US$700 million (S$960 million) was misappropriated after the funds was transferred to an account associated with Low instead of a PetroSaudi unit which 1MDB had entered into a joint venture with. PetroSaudi International is a Saudi oil services company.

 
 
 
 

A sum of US$1.83 billion of 1MDB monies eventually went missing after it was laundered into accounts associated with Low, instead of its intended recipient in the joint-venture company.

The court also heard that the deal with PetroSaudi was conceived aboard a yacht that Najib and his family took during summer vacation in 2009. The accused had met PetroSaudi executives Saudi Prince Turki Abdullah and Tarek Obaid, in the presence of Low, who initiated the meeting.

Najib faces four charges of using his position to obtain bribes totalling RM2.3 billion (S$760 million) from 1MDB funds, besides 21 charges of money laundering involving the same amount.

The witness said while Low appeared as an "orchestrator to Najib", the former premier had agreed to all directives given by the fugitive. Mr Shahrol described Low and Najib's relationship as "symbiotic", with the former executing the wishes of the latter, while the latter approves decisions.

Malaysia's police chief Abdul Hamid Bador told reporters that the authorities have determined Low's location and is looking to bring him back by year end to assist in 1MDB investigations.