The Malaysian Insight

NAJIB Razak’s personal bank account was credited US$790 million (RM2.4 billion), an amount that was supposed to be a security deposit paid out to United Arab Emirates state investment vehicle International Petroleum Investment Co (IPIC), a witness told the 1MDB trial today.

Testifying at the Kuala Lumpur High Court, former 1Malaysia Development Bhd chief Shahrol Azral Ibrahim Halmi did not say when the transaction took place.

IPIC entered into an agreement in 2012 to guarantee two separate bonds issued by 1MDB totalling US$3.5 billion.

The first bond in early 2012 raised US$1.75 billion for the buyout of independent power producer (IPP) Tanjong Energy Ltd from tycoon Ananda Krishnan.

Months later, a separate bond raised another US$1.75 billion to finance the acquisition of another IPP – Genting Sanyen Sdn Bhd. The buyout of Genting was also assisted with a bridging loan of RM700 million.

As part of a deal for IPIC to guarantee the Genting Sanyen-related bond, 1MDB was to pay a security deposit of US$790.35 million to IPIC subsidiary, Aabar Investment PJS.

However, the money was instead transferred on October 19, 2012 into Aabar Investment PJS Ltd (Aabar BVI), another company based in the British Virgin Islands, the court heard today.

Prosecutors have said the BVI-based company was controlled by fugitive financier Low Taek Jho, commonly known as Jho Low, and his associates.  

The former prime minister is only trial for four counts of power abuse to enrich himself with RM2.3 billion from 1MDB and 21 counts of laundering the same amount.

“I admit there is a huge excess from the financing of the acquisition (of Genting Sanyen),” Shahrol said.

“But I want to stress again that I did not know that the excess funds used for the security deposit payment amounting to US$790,354,855 to Aabar was used for fraud by others.”

Shahrol said the security deposit payment, which he made to Aabar BVI, was made “in good faith” based on documentation provided by 1MDB’s then general counsel Jasmine Loo, 1MDB executive director of finance Terence Geh and Goldman Sachs Asia CEO Tim Leissner.

“Only after the investigations were carried out did I learn that Jho Low allowed 1MDB money flow into an account controlled by him, and later to Datuk Seri Najib’s account.”

The remittance documents were signed by Geh and 1MDB CFO Azmi Tahir. The US$790 million was supposed to be transferred to Aabar BVI’s account in BSI Bank SA, in Lugano, Switzerland from Falcon Private Bank in Hong Kong, which held a bank account owned by 1MDB subsidiary 1MDB Energy (Langat) Ltd, also known as 1MELL.

“I reiterate that I do not know who determined the amount US$790,354,855, which I admit is a large amount compared to the US$1.75 billion in bonds issued for the IPP Genting Sanyen buyout.

“However, I had absolutely no doubt at the time and I did not question it then, because I assumed that this was a matter previously discussed and agreed upon between Najib and IPIC, based on the action plans and discussions I’ve had with Jho Low.”

The witness reiterated that he believed that Low was mandated by Najib to orchestrate all of the company’s bonds issuance and IPIC guarantee.

He said the acquisition of Genting Sanyen was only carried out after approval by Najib, in his capacity as finance minister. Najib then led the Minister of Finance (MoF) Inc, which owned 1MDB.  

Najib, 66, 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. – September 30, 2019.