The Malaysian Insight

THE defence is expected to continue grilling the prosecution’s ninth witness, 1Malaysia Development Berhad (1MDB) former CEO Shahrol Azral Ibrahim Halmi, as former prime minister Najib Razak’s trial enters its 33rd day today.

Lead defence counsel Muhammad Shafee Abdullah will cross-examine Shahrol during the trial at the Kuala Lumpur High Court.

The trial will begin later this morning as senior deputy public prosecutor Gopal Sri Ram attends to another case first.

Yesterday, Shahrol denied knowledge of an email exchange in which a PetroSaudi International Ltd (PSI) executive proposed to blame 1MDB for US$1 billion (RM3 billion then) in losses in a joint venture between the Malaysian state investor and PSI.

The letter, sent by PSI director Patrick Mahony to PSI CEO Tarek Obaid on August 7, 2010, discussed plans to meet Najib to explain the losses, the high court heard yesterday.

“I am not comfortable to comment on this because I have no idea of what they were talking about,” Shahrol had said.

In the joint venture in 2009, 1MDB had injected US$1 billion for a 40% stake in PSI.

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.

Both were later revealed by investigators to be sham companies, with Good Star controlled by fugitive businessman Low Taek Jho, better known as Jho Low.

During cross-examination, Shahrol agreed with a suggestion that there appeared to have been a conspiracy by Mahony and Tarek to deceive Najib then.

Shahrol also verified documents that showed Tarek transferred about US$83 million (RM250 million) to Good Star days after 1MDB put up US$500 million as part of a Murabaha financing agreement in September 14, 2010.

Najib, 66, is on trial on 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.

Najib is represented by a dozen lawyers led by Shafee. Former Federal Court judge Gopal Sri Ram leads the prosecution before judge Collin Lawrence Sequerah.

The Malaysian Insight brings you today’s proceedings live: – November 7, 2019.

5.42pm: Sequerah says that he wants the 1MDB trial to begin at 9am on Monday, but it will adjourn and reconvene for justice Nazlan to deliver his decision in the SRC trial. Lawyers do not object to Sequerah’s request that the 1MDB hearing proceed beyond 5pm on Monday.

Court is adjourned.

5.40pm: He tells judge Sequerah that the high court will rule on Monday whether Najib has to enter his defence in the SRC International trial. Shafee says a decision is expected at 10am.

5.39pm:  Shafee says he is done with this area of cross-examination.

5.36pm: Shahrol says after reading a series of news articles, including those published by The Edge in 2015, he began to question Low whether he owned Good Star. 

Shahrol: I asked Jho to explain. But he said Good Star is owned by PetroSaudi and he will get PetroSaudi to write a letter to confirm. 

The witness agrees with a suggestion by Shafee that a PSI letter later claiming ownership of Good Star was deceptive and false.

5.24pm: Shafee suggests that Low’s claims that “daddy”, or King Abdullah, was informed of the delay was fabricated, to which the witness agrees that it was a possibility.

Shafee: Can I now suggest to you (that) he (low) was the one who was hurrying you up to send the money to him?

Shahrol: It is possible.

5.09pm: Shafee is going through documents, including letters from 1MDB to Bank Negara, relating to the US$330 million.

4.44pm: Shahrol verifies that US$30 million was paid to Good Star on May 20, 2011; US$65 million on May 23, 2011; US$110 million on May 27, 2011; and US$125 million to October 25, 2011. The total amounts to US$330 million, the witness confirms.

4.39pm: The witness says Jho told him then that PSI was disappointed and unhappy with the delay. 

Shahrol says Jho Low said “they complained to daddy”, which meant PSI co-founder Prince Turki Abdullah allegedly informing King Abdullah of Saudi Arabia of the delay.

4.35pm: Shahrol says of the US$330 million, only US$205 million was transferred in three tranches in May 2011 because 1MDB did not have enough funds. 

The witness says there were not enough to fund Bandar Malaysia and KLIFB (Kuala Lumpur International Financial District) projects. 

“I informed Jho (Low) about it. He informed me to send a letter to PetroSaudi to put it in black and white,” says Shahrol.

4.28pm: Shahrol is referred to a letter of instruction from 1MDB to Deutsche Bank, dated May 26, 2011, for the remittance of US$110 million to RBS Coutts Bank Ltd Account No. 11116073.2000. The account was previously identified as belonging to Good Star.

4.25pm: Court resumes.

3.54pm: Court takes short recess.

3.48pm: The witness agrees that by May 2011, the total amount transferred to both the joint venture company, 1MDB-PetroSaudi Ltd, and Good Star amounted to US$1.83 billion.

3.38pm: Shafee says the defence is trying to prove was that Najib was not fully aware of the details of the transactions. 

The lawyer says Shahrol is a professional handling much transnational documents, and yet was not himself aware of illicit activities carried out in 1MDB.  

“The same witness made the imputations of my client’s guilt, when my client does not have the benefit of these documents,” says Shafee.  

“I want to make him (Shahrol) swallow his own vomit. And to pose to him, ‘Why are you not acting consistently when these documents have come to you over and over again?’” 

The judge tells Shafee, when tendering documents to the court, it is not necessary to read them out in their entirety.

Shafee agrees.

3.34pm: Sri Ram objects to how defence is conducting the cross-examination, saying its direction is not clear.

3.29pm: Shahrol refers to a query by AmBank on May 12, 2011, which sought to clarify the beneficiary of the first transfer, which it said was not PetroSaudi International. 

The witness verifies a letter to 1MDB by Tarek, who wrote that the beneficiary was merely stated as “Account No. 11116073.2000”.

Shahrol says PSI never showed the account as being held by Good Star, which was the recipient of US$700 million in a 2009 joint venture between 1MDB and PSI. 

The witness says he does not recognise the account number as he did not memorise it.

On why PSI hid the identity of Good Star: “I cannot testify to why they did it. In hindsight, it is odd they did not just outright say Good Star as they did in the 2009 transaction.”

3.17pm: The witness says he does not know why Radhi did not verify the account number given by PetroSaudi International.

3.14pm: Shahrol says it was discovered later that PSI CEO Tarek Obaid had given the account number of Good Star, held by RBS Coutts Bank Ltd in Zurich, to 1MDB and that all the transmission of the US$330 million had made its way into Good Star.

3.02pm: Shahrol confirms documents that showed that the final tranche of US$125 million on October 25, 2011, was in fact transferred to Good Star Ltd’s bank account. The document instructing the transfer was signed by Radhi. Investigators have said that Good Star is a Seychelles-based company controlled by Low Taek Jho, commonly known as Jho Low.

2.47pm: Shahrol says he discussed the purchase of the US currency with then 1MDB chief financial officer Radhi Mohamad. Radhi recommended that the amount be purchased in several tranches to ensure they get a good rate by not moving the market too much. 

The payment was made through 1MDB’s AmBank and Deutsche Bank accounts in four tranches from May 20, 2011 to October 25, 2011.

2.43pm: The amount was guaranteed by PetroSaudi International (PSI), says Shahrol.

2.37pm: Shafee refers to a directors’ circular resolution, dated May 16, 2011, which sought to approve 1MDB to invest an additional RM1 billion under the Murabaha financing agreement with 1MDB-PetroSaudi Ltd. The amount was equivalent to US$330 million. The witness confirms he signed the document.

2.33pm: Shahrol takes the stand.