The Malaysian Insight

THE prosecution’s ninth witness, former 1Malaysia Development Bhd CEO Shahrol Azral Ibrahim Halmi returns to the witness stand as Najib Razak’s trial enters its 14th day today.

Shahrol, who is also formerly the chief executive of Terengganu Investment Authority, the precursor to 1MDB, is about halfway through his witness statement.

Yesterday, he testified that Najib had ordered him in November 2009 to write a letter to the auditor-general to prevent an audit into the investment fund.

The same month, Najib followed up with a letter of his own stating that the 1MDB advisory board had agreed to have the “federalisation” of TIA approved by the cabinet and that this was done on an “as is, where is” basis.

Najib, who chaired the 1MDB advisory board, also recommended that a third party should be appointed to perform the audit. Accounting firm Ernst and Young was subsequently appointed for the job, the witness told the court.

Najib is on trial for four counts of power abuse to enrich himself with RM2.3 billion from 1MDB and 21 counts of laundering the same amount. He faces up to 20 years in prison if convicted.

Yesterday, Shahrol also said the former prime minister in September 2009 instructed the 1MDB board of directors to expedite a joint venture with PetroSaudi International, allegedly because the Saudi royal family would soon visit Malaysia to discuss the deal.

Shahrol said as a result, US$700 million (RM2.9 billion) was transferred to a company called Good Star Ltd. The witness said he later found out from the investigating authorities that the company was controlled by Low Taek Jho, popularly known as Jho Low.

The witness described Low’s relationship with Najib as “symbiotic”, saying Low did what Najib wanted and in return the former prime minister gave the necessary government approvals in required by 1MDB.

Shahrol added that the idea of a joint venture with PetroSaudi was conceptualised while Najib was on holiday in the south of France with Saudi Prince Turki Abdullah Abdulaziz Al-Saud, who owned the company.

The 66-year-old accused is represented by a dozen lawyers led by Muhammad Shafee Abdullah.

Former Federal Court judge Gopal Sri Ram leads the prosecution while Kuala Lumpur High Court judge Collin Lawrence Sequerah presides.

The Malaysian Insight brings you today’s proceedings live:

4.13pm: Court adjourns till Monday.

3.40pm: Shahrol says 1MDB completed its purchase of Tanjong on March 2, 2012.

3.33pm: Shahrol says two gas power plants were bought after 1MDB had purchased Tanjong. Goldman Sachs did the valuation of these power plants.

3.27pm: The “engagement letter” that Shahrol signed also stipulated that if the deal was called off or had collapsed, then Goldman would be paid 30% of the total transaction. The takeover of Tanjong was RM10.6 billion. Shahrol says that the 0.5% (plus other fees) or RM100 million was paid to Goldman Sachs.

3.24pm: He says 1MDB had appointed Goldman Sachs as financial adviser to procure Tanjong Energy Holdings. The document to apoint them was signed by Shahrol. It stipulates that Goldman Sachs would get 0.5% of the transaction fee between 1MDB and Tanjong.

3.18pm: Shahrol says from enquiries he made about Tanjong, it was true that they were going to sell.

“Goldman Sachs was also involved in buying Tanjong.”

3.17pm: Shahrol: We saw this as a great opportunity in our foray into the IPP sector. I told Jho Low about it and he agreed. He asked me to come up with a concept paper to be given to the pprime minister on the investment.

“Najib also gave positive feedback on this. So ... it will become big.”

3.16pm: Shahrol tells the court that in November 2011, he was invited by Mubadala to Abu Dhabi to watch the Formula 1 race. This meeting was arranged by Jho Low.

“While I was there, I was invited to attend a gala dinner. It was arranged in such a way that I sat next to Mubadala CEO Philip K. Haddad.

“It was here that Philip tipped me off that Ananda Krishnan wanted to sell his shares in Tanjong Energy Holding Sdn Bhd.”

3.13pm: Sri Ram: You said that after the meeting, the Goldman Sachs people left. Who left first? 

Shahrol: Lodin and I left first, Jho Low, Goldman Sachs and Najib we’re still in the room.

3.12pm: Sri Ram: Did the accused appear surprised you were at the New York meeting? 

Shahrol: No he wasn’t. 

Sri Ram: From what you observed, what was Najib’s and Jho Low’s body language? 

Shahrol: At that meeting, Jho low was seated far back from Najib. Najib was seated with Lloyd. Jho Low was hovering in the background at the other end of the room. 

Sri Ram: Did the accused have a conversation with Jho Low? 

Shahrol: I didn’t see. I don’t remember the sequence of (events at) the meeting. Lodin and I were ushered in before the Goldman Sachs people were there. 

Sri Ram: When you walked into the room, Jho Low was already there with the accused? 

Shahrol: I can’t remember. I remember we were waiting outside for a while. I don’t remember if Jho was with us, or the Goldman people or already in the room.

3.08pm: Shahrol says one of the main sectors 1MDB wanted to invest in was Independent Power Producers (IPPs) in May 2010. 

He says they wanted to invest in IPPs to increase electricity generation levels in peninsular Malaysia by 2016.

Sri Ram then asks Shahrol about the New York meeting.

3.07pm: The witness says based on that meeting in New York, whenever Jho Low wanted to bring in Goldman Sachs as a financial adviser in 1MDB’s negotiations, be it financial and investments, was done with the blessing of Najib. 

“I was instructed by Jho Low that Goldman’s involvement was done in good faith as it had already received approval from Najib.”

3.07pm: Shahrol says Najib had requested for support and consultation from the Blankfein as Goldman Sachs had the expertise in finance and investments. 

They also discussed 1MDB investing in real estate, energy, tourism and agriculture. 

“After that meeting, my confidence in any monetary dealing with Goldman was high.”

3.06pm: Shahrol says Jho Low was the facilitator for Najib, whereas Leissner was facilitating for Lloyd. 

“It seemed that Leissner and Jho Low were close friends, based on their body language at the meeting.”

3.05pm: Shahrol continues testimony, saying that Najib met investors in New York in November 2009.

“I was also instructed by Jho Low to accompany Najib to meet these investors, who wanted to do invest in 1MDB.” 

He says he went to New York with Lodin. 

Shahrol says on November 22, Najib met then Goldman Sachs CEO Lloyd Craig Blankfein, the banks head of Asian operations Tim Leissner and Jho Low.

3.02pm: Shafee objects that these cheques are brought up. He says what Shahrol is saying is hearsay because the instructions are between him and Jho Low. 

Sequerah rebuts: “But he heard it from Jho Low, Jho Low told him. This is what he perceived, this is what a person told him.”

3pm: Sri Ram: There are four cheques. Can you explain, you received these cheques, what did you do with them? 

Shahrol: I received them from Jho Low. He asked me to hold on to them until he gives the go ahead. He never instructed me otherwise until the end of my tenure as CEO. I then handed these cheques over to 1MDB’s finance. 

After the PetroSaudi joint venture in 2009, around the time we converted the equity to the murabaha notes, Jho Low informed me that the Saudi royal family wanted to donate US$100 million to Yayasan 1MDB. 

I remember he was asking me who to make the cheque out to. I remember making enquiries to AmBank as to what’s the right name on the cheque.

In September, I received them but they were never cashed. 

Sri Ram: Do you know who’s signature appears on these cheques? 

Shahrol: No.

2.56pm: Sri Ram: Sometime in September 2010, did you receive cheques from Jho Low? 

Shahrol: Yes, I did.

2.54pm: The owner of Red Granite is Riza Aziz. 

Sri Ram: Do you know who this is? 

Shahrol: That is Najib’s stepson.

2.52pm: Sri Ram: Red Granite received some money from Good Star on behalf of RBS Coutts. Did you know this? 

Shahrol: No.

Sri Ram shows him a transaction document where US$9 million went from Good Star to Red Granite.

2.51pm: Sri Ram shows Shahrol a document which shows Jho Low as the beneficial owner of Good Star Ltd. 

Sri Ram: Did you know this fact when you were dealing with Good Star? 

Shahrol: No. 

Sri Ram shows him a transaction document where USD9 million went from Good Star to Red Granite.2.46pm: Sri Ram says no problem to finish by next week. Sequerah tells Shafee he will play it by ear, for now.

Sri Ram continues his examination in-chief.

2.45pm: Shafee also informs Sequerah says that he will be done with current witness week, he is requesting that there will be no proceedings on October 2 and 3 because he has another case.

2.41pm: Shafee and Sri Ram ask justice Sequerah that they be allowed to work in the court room during lunch.

2.38pm: Court resumes.

12.21pm: Court adjourns for lunch.

12.05pm: Shahrol says Jho Low instructed him to destroy all the talking points, action plan’s and emails, as they could have been detrimental to Najib’s political career if the wrong hands.

12.02pm: He says the talking points were to put across that PetroSaudi was trustworthy and has a good reputation.

11.58am: I felt he did not lie about Najib’s approval because Najib had told me to act upon the ambit of the talking points, Shahrol says.

11.57am: The talking points contained Petro Saudi’s history, formation and affiliation with King Abdullah, says Shahrol.

He says Jho Low had given assurances that these talking points were agreed upon by Najib.

11.56am: Sri Ram: But the object of the talking points was to answer queries? 

Shahrol:Yes, this was incase the PAC in parliament, the auditor-general and any other government parties asked about 1MDB.

11.54am: Shahrol: When Arul Kanda replaced me, members of the board advised him not to speak publicly about 1MDB.

11.54am: Sri Ram: Do you recall the accused making any public statements in 1MDB’s defence? 

Shahrol: I don’t recall. 

Sri Ram: Do you recall any instance where the accused addressed the public about 1MDB. 

Shahrol: I don’t recall any specific incident where Najib spoke publicly about 1MDB.

11.52am: Court goes through a talking points background document.

11.48am: Shahrol says initial media reports about 1MDB had pinned him as the culprit who had transferred US$700 million to Good Star Ltd, but Jho Low was the ultimate beneficiary of these funds.

11.47am: He says Pemandu was a unit under the Prime Minister’s Department headed by minister Idris Jala. The unit was set up to drive the implementation of the Economic Transformation Programme which started in 2010.

11.45am: The witness says he was surprised when Lodin told a 1MDB board meeting that Shahrol was going to Pemandu.

Shahrol: I received my offer letter from Pemandu.

11.44am: Shahrol says he felt that there were so many things left undone in 1MDB, such as TRX and Bandar Malaysia, as well as improving the independent power producers industry.

11.43am: Shahrol says at the end of 2012, Jho Low had asked him if he wanted to work in Pemandu. Shahrol told Jho Low that he serves the PM and if Najib wanted him to go there, he would.

11.33am: The witness says when the meeting took place, US$1 billion had been deposited into PetroSaudi’s account.

11.32am: Shahrol says at the meeting, there was no mention of the money PetroSaudi had received from 1MDB. He says no minutes of the meeting here kept.

11.31am: The witness says at these meetings, they went through investments Petro Saudi could make in Malaysia.

11.30am: The witness says at the start of the meeting, Jho Low gave Najib a watch as a present.

Sri Ram asks if it was an expensive watch.

The witness replies: “Yes, it looked expensive.”

11.28am: Sri Ram asks the witness if minutes of the meetings were kept.

Shahrol replies yes. He says Patrick Mahoney, Tarik and Low were there.

11.24am: Shahrol says he felt “uncomfortable” about the transfer of US$1.83 billion from PetroSaudi to 1MDB.

He says Najib met with the 1MDB board on May 16, 2011 at London’s Hilton Park Lane hotel. He says this was arranged on the advice of Low.

He says Najib met with the directors three times there.

11.01am: Court resumes session.

Sri Ram addresses Sequerah, asks the judge if he would like to adjourn the trial till tomorrow as he is not looking too well.

Sequerah thanks Sri Ram for his concern but he will carry on today.

Shafee says he is not aware the judge is sick.

Sequerah thanks them both for their concern and tells the witness to continue reading his statement.

10.37: Court takes a recess.

10.33: They go through a stack of of letters, emails, correspondences, transaction documents from 1MDB and Petro Saudi.

10.04am: Correspondence between 1MDB and arranger banks AmInvestment bank and Standard Chartered Bank Bhd is produced. The document carries intructions to prepare US$300 million (RM1.25 billion). Shahrol says this was preparatory to the loan to PetroSaudi.

10am: A document is produced which was pursuant to an agreement dated September 13, 2010. It grants indulgence to the lenders to use RM1.6 billion for subscription of debt securities to be issued by 1MDB PetroSaudi Limited, British Virgin Islands. The document bears Shahrol’s signature.

9.40am: Court is in session.

Shahrol goes over his witness statement, verifies 1MBD documents on an AmBank term loan of RM2.5 billion.