Former 1MDB CEO signed away US$1 billion without checking, court told

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Datuk Shahrol Azral Ibrahim Halmi, who was 1MDB CEO from 2009 to 2013, was put in the spot when asked to explain all this during cross-examination by lawyer Tan Sri Muhammad Shafee Abdullah.

KUALA LUMPUR: The 1Malaysia Development Bhd (1MDB) management literally gave a loaded gun to PetroSaudi International Ltd (PSI) to be held against its own head when it signed a joint venture agreement (jva) with the company, the High Court heard today.

It was revealed that 1MDB management did not even do basic checks about the company, let alone find out if it was really involved in offshore oil and gas exploration and the energy sector in places like Latin America, Europe and Central Asia.

Worse still, the former chief executive of 1MDB was left searching for words when asked to explain how he signed away US$1 billion of the nation’s money to a wrong company.

Datuk Shahrol Azral Ibrahim Halmi, who was 1MDB CEO from 2009 to 2013, was put in the spot when asked to explain all this during cross-examination by lawyer Tan Sri Muhammad Shafee Abdullah.

The 49-year-old was testifying in former prime minister Datuk Seri Najib Razak’s case involving the misappropriation of 1MDB funds amounting to RM2.28 billion.

Shafee concentrated on 1MDB’s jva with PSI in his cross-examination of the key prosecution witness today.

He started off by asking Shahrol to explain how the company linked to the Saudi royal family had first approached 1MDB, to which Shahrol said it was done through a letter dated Aug 28, 2009, from Prince Turki Abdullah Bin Abdul Aziz Al Saud to Najib.

The business proposal involved PSI putting up US$2 billion in assets and 1MDB coming up with US$1 billion.

Shahrol said he was convinced from the onset that the deal was a government to government arrangement which had come about due to the close relationship between Najib and the Saudi royal family.

However, when asked by Shafee how he had come to the conclusion, Shahrol said it was based on what Low Taek Jho @ Jho Low had told him.

Low, who is now on the run from Malaysian police, is widely seen as the mastermind behind the 1MDB scandal.

“Jho Low said he was there in a yacht during one of their holidays when this joint venture proposal was discussed by Najib and the Saudis,” Shahrol said.

He said the proposed jva was subsequently named Project Aria, a random named picked by the management of 1MDB.

Shahrol said the entire 1MDB management was then pressured into working a tight deadline for the signing of the jva to take place.

“We were told by one of Jho Low’s appointees in 1MDB that the Saudi King himself would be coming here to sign the agreement with Najib and everything needed to be done quickly,” he said.

Shafee: In the end what happened?

Shahrol: Finally, only the CEOs of both companies ended up signing the jva. I signed on behalf of 1MDB and Tarek Obaid signed for PSI.

Shafee: It was not as high up as what was represented earlier?

Shahrol: Yes.

Shafee then put Shahrol through a series of questions on what kind of due diligence was done before 1MDB entered into the venture with PSI.

To this, the former top gun of 1MDB said he basically just relied on ‘oral due deligence’ on the company’s background.

Shafee: You mean you just took their word on their so called US$2 billion worth of assets without doing any due diligence to determine the credibility and veracity of their claims?

Shahrol: My state of mind at that time was that PSI was a trustworthy partner. Their word was good enough for us to proceed. Moreover, this was a government to government transaction.

Shafee: But isn’t it professionals like you who are supposed to take charge and ensure 1MDB was not short changed?

Shahrol: Within the parameters, yes.

Shafee: You earlier said 1MDB is in excellent position because King Abdullah was using this jva as a ‘friend helping a friend’ deal. Who told you this?

Shahrol: Jho Low.

Shafee: But did he say King Abdullah told him this?

Shahrol: Well, it was not like the King tapped Jho Low on the shoulder and said “hey brother, I’m doing this to help a friend”. Jho Low just said the King is doing this to help us.

Shafee then moved on to ask Shahrol about PSI’s

claims about its activities.

He asked the latter if the 1MDB management even bothered to find out that PSI’s claims were nothing but hot air.

Shafee: Didn’t someone at least get their financial report?

Shahrol: I did not see any.

Shafee: Any company of that magnitude will surely have an annual report.

Shahrol: I did not see any. We relied heavily on information provided by PSI themselves.

Shafee: Did PSI have a website?

Shahrol: Yes

Shafee: It can be easily checked. It was all hot air. They claimed to have ventures in Latin America, Europe, and Central Asia but there were no specifics. As a CEO, you never checked all this? For example they claimed they had offshore activities in Turkmenistan. It was a disputed area between two central Asia countries but actually they never owned anything there.

Shahrol: Correct.

Shafee: Isn’t all this relevant information when you are investing billions?

Shahrol: Yes.

Shahrol later also agreed that the entire 1MDB management could have been ‘played’ like an orchestra by Jho Low.

“The part which is clear to me now is that he is like the conductor of an orchestra where different players do their part without knowing what others are doing.”

Shafee: You were one of those in the orchestra?

Shahrol: I agree.

Shafee: If professionals like you were put in that position, my suggestion is couldn’t the prime minister also have been put in the same spot?

Shahrol: It is difficult for me to comment as I do not have all the facts. The manipulation was done with a very good disguise that this is good for the country and the prime minster. However, I don’t know what the prime minister knew then.

Later, Shafee started grilling Shahrol on how 1MDB ended up signing the jva with Petro Saudi Holdings (Cayman) Ltd. instead of with PSI.

Shahrol explained that this happened after 1MDB executive director Casey Tang told him that everything was in order.

“Casey told me he had already checked with the lawyers and said it was okay to sign.

“I assumed he had crossed all the T’s and dotted all the I’s.”

Shafee: You were signing away US$1 billion to an unknown company. How do you account for it… how do you explain this?

Shahrol: The same way I am explaining in this court. Casey said it was okay.

Shafee will continue with the cross-examination tomorrow.

NST


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