Ex-CEO agrees restructuring deals aimed to hoodwink 1MDB board
Former 1MDB chief executive officer Shahrol Azral Ibrahim Halmi agreed that the restructuring of the company's joint venture deal with PetroSaudi International (PSI) was intended to hoodwink the 1MDB board, the Kuala Lumpur High Court heard today.
Shahrol (above) said he came to this conclusion with the benefit of hindsight when he was cross-examined by lead defence counsel Muhammad Shafee Abdullah in former prime minister Najib Abdul Razak's RM2.28 billion 1MDB corruption trial.
Shafee: All these restructurings, the whole idea was to make it more difficult for the board members to know the true value of the investment.
Shahrol: Yes.
Shafee: Are you now satisfied this was a mechanism to hoodwink the board into believing their investment is still good?
Shahrol: In hindsight, yes.
Shafee then suggested that if the whole 1MDB board could be hoodwinked, then the same may have happened to Najib.
"Can the prime minister or finance minister be in a position to be wiser than the board?" Shafee asked.
To this, Shahrol replied: "I cannot comment as I don't know if the prime minister or finance minister had access to information at the time".
Najib (above) served as both the prime minister and finance minister from 2009 to 2018.
Shafee cited the US Department of Justice's (DOJ) civil forfeiture suit in the 1MDB matter where it said the various restructurings were intended to "make it easier to obscure the value of 1MDB's investment in the joint venture".
According to the DOJ, 1MDB had invested US$1.83 billion (RM7.83 billion) in its joint venture with PetroSaudi but US$1.03 billion was in fact siphoned to Good Star Limited for the benefit of businessperson Low Taek Jho and his associates between 2009 and 2011.
The joint venture shares were later converted to Islamic debt notes which the DOJ noted was "valued at approximately US$2.22 billion, notwithstanding the fact that at least US$1.03 billion had been diverted from 1MDB's stated investment in the joint venture".
In 2012, 1MDB exchanged the Islamic debt notes for a 49 percent stake in PetroSaudi Oil Services Limited which was purportedly equivalent to US$2.22 billion even though it had net assets of only US$93.6 million at the time.
This stake was later in the year converted into "fund units" in Bridge Global Absolute Return Fund SPC, an obscure fund registered in the Cayman Islands and managed by Bridge Partners.
1MDB claimed they were worth US$2.318 billion but the DOJ had said they were "relatively worthless".
1MDB was at the time under pressure to bring the money back to Malaysia.
Zooming in on the fund units deal, Shafee asked if it was intended to cloud the board so that they would not know the true value or if there was any value at all, to which Shahrol replied in the positive.
Shafee: The US$2.22 billion investment (converted) to US$2.318 billion is to further blind the board into thinking it was on the right track.
Shahrol: Yes, in hindsight.
Shafee: You were not part of the discussion?
Shahrol: No.
Shahrol piled the bulk of the blame on 1MDB general counsel Jasmine Loo Ai Swan, who was an alleged operative of Low.
He also maintained that he went along with what Low wanted believing that he had Najib's blessing.
"I trusted them," Shahrol said.
Shafee later chastised Shahrol for repeatedly laying the blame on Jasmine and Low (above), also known as Jho Low.
Shafee: I'm confused. Who is the CEO of 1MDB? You or Jasmine?
Shahrol: I acted on Jasmine's advice. She was in charge of the restructuring exercise.
Shafee: You were the head of management. You were the CEO. I put it that you with Jho Low planned the whole investment plan. Do you agree?
Shahrol: Disagree.
Shafee later chastised Shahrol again for not taking any responsibility for the deals.
"The number of times when you blame others instead of yourself is remarkable.
"I put it to you that you cannot be so naive and negligent. This is a joint venture between you and Jho Low," he said. However, Shahrol maintained this was not true.
Meanwhile earlier during proceedings before Judge Collin Lawrence Sequerah this morning, Shafee applied for hearings in the week beginning July 13 to be vacated as Najib needs to attend Parliament that same week.
“July 13 to 17 is Parliament sitting, probably the most important session of Parliament due to certain turbulence one (may) expect. My client is expected to be there,” Shafee said.
Sequerah said he could only consider allowing postponement on a day-by-day basis depending on the urgency and importance of events at Parliament that may require the Pekan MP to be there.
Shafee said the defence team will try to get the list of events slated at Parliament for that week in order to determine when Najib may not be able to come to court.
Proceedings before Sequerah will resume this afternoon.
