Najib said no need for PetroSaudi assets to be valued twice, court told
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FORMER prime minister Najib Razak advised against a second valuation of assets allegedly owned by 1MDB joint venture partner PetroSaudi International, the Kuala Lumpur High Court heard last week.
This was despite the questions raised by the 1MDB board after US$1 billion (RM4 billion) in public funds was moved out the country in late 2009.
Former 1Malaysia Development Bhd CEO Shahrol Azral Ibrahim Halmi testified last week that Najib felt a second valuation of PetroSaudi’s oil and gas properties in Argentina and Turkmenistan, allegedly valued at US$2.2 billion would have a “downside”.
Najib was consulted for advice in his capacity as the chairman of the 1MDB panel of advisers on October 16, 2009 after US$1 billion was channelled to PetroSaudi Holdings (Caymans) Ltd and Seychelles-based Good Star Ltd, which investigators later revealed were sham companies.
Najib “advised there were more downsides than upsides in pursuing the second valuation”, Shahrol told the court during cross-examination.
“It was cemented in my mind that he preferred not to have a second valuation,” the 49-year-old witness said.
The first valuation was carried out by independent valuer Edward L. Morse, who was paid US$100,000 for his services, before a joint venture deal was signed between 1MDB and PetroSaudi International on September 25, 2009.
The 1MDB board of directors had raised questions on October 3, 2009, days after the US$1 billion was paid in two transfers.
To a suggestion from the defence that Najib never explicitly ordered the board against getting a second valuation but was merely expressing his opinion, Shahrol said Najib’s opinion nonetheless held weight.
“Realistically when the prime minister gives his own opinion, I think a lot of people think this is something that must be done,” the witness said.
Under the terms of the US$2.5 billion deal with PetroSaudi, 1MDB was to inject a cash capital of US$1 billion for a 40% stake in the JV.
Shahrol told the court that the board was not informed prior that the US$1 billion would instead be transferred to two separate entities.
Five days after the joint venture deal was signed on September 25, 2009, US$300 million was paid to PetroSaudi Holdings (Cayman) Ltd and US$700 million, to Good Star Ltd.
PetroSaudi Holdings is not officially linked to the UAE-based PetroSaudi International while Good Star Ltd was later revealed to be controlled by fugitive financier Low Taek Jho, commonly known as Jho Low.
Najib, 66, 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.
Prosecutors have accused him of conspiring with the Penang-born Low to defraud the state investor.
Shahrol said he was pressured to get the joint venture deal done by then 1MDB executive director Casey Tang.
“My frame of mind was that this is something that needs to be done and everything should be in order because experienced people were looking at it and ultimately Casey advised me that this was all right and that the board be informed later of the circumstances,” Shahrol said.
Good Star Ltd paid PetroSaudi International CEO Tarek Obaid US$85 million on October 5, 2009, days after the shell company received US$700 million from 1MDB.
Documents tendered to the court by the defence showed the payment was made from Good Star’s account with RBS Coutts to Tarek’s account with JP Morgan.
Documents further showed that two weeks later on October 20, US$33 million was transferred from Tarek’s account to his associate, PetroSaudi director Patrick Mahoney.
“Christmas came a bit early that year?” said lead defence counsel Muhammad Shafee Abdullah during cross-examination, to which Shahrol nodded in the affirmative.
Najib is represented by a dozen lawyers. Former Federal Court judge Gopal Sri Ram leads the prosecution before judge Collin Lawrence Sequerah.
The trial continues tomorrow. – November 3, 2019.