1MDB’S board of directors never approved the transfer of US$699.3 million from its energy subsidiary to an alleged fake Aabar entity incorporated in Seychelles, the Kuala Lumpur High Court heard today.

Former 1Malaysia Development Berhad chief executive officer Shahrol Azral Ibrahim Halmi, the ninth prosecution witness, said under cross-examination the board was never briefed nor asked approval on the fund transfer from 1MDB Energy Holdings Limited to Aabar Investments PJS Limited (Seychelles). 

Shahrol, who was 1MDB CEO from 2009 to 2013, said this during the RM2.28 billion 1MDB corruption trial of former prime minister Najib Razak today. 

Under cross-examination by counsel Wan Aizuddin Wan Mohammed, Shahrol also said he was not aware of the second shell company bearing the name Aabar. 

Previously, it was revealed that Aabar BVI was a shell company registered in the British Virgin Islands and not an actual subsidiary of International Petroleum Investment Company (IPIC), which should have received the funds.

IPIC’s real subsidiary is Aabar Investments PJS without the “Ltd”.

Wan Aizuddin: Was the board of directors of 1MDB briefed about this remittance of US$223 million to Aabar BVI?

Shahrol: No, we were not.

Wan Aizuddin: As of right now, are you aware that there are two Aabar Investments PJS Ltd entities – one is (incorporated) in the British Virgin Islands and another in Seychelles?

Shahrol: I may have been shown the documents during investigation.

Wan Aizuddin: You agree it has nothing to do with the real Aabar?

Shahrol: I cannot comment on that.

The US$699.3 million allegedly originated from a US$1.225 billion loan given by Deutsche Bank Singapore to 1MDB Energy Holdings between May and August 2014. 

This money was supposed to be used to pay back the “Aabar options” but it never materialised.

Shahrol also told the court these decisions were not his to make and was made by the Prime Minister’s Office (PMO).

Shahrol: In 2014 and 2015, a lot of the decisions along the Aabar Options and the IPIC guarantee were done at the Prime Minister’s Office level.

Wan Aizuddin: Would you agree with me that surely, the shareholder and the chairman of the board of advisers (referring to Najib) would have only agreed to what was proposed by the management?

Shahrol: I cannot comment as I have no knowledge of discussions between the management and the chairman of the board of advisers.

Wan Aizuddin: Would you agree with me that as a prudent businessman, rather than taking that loan, liquidating the asset was the better option?

Shahrol: Yes, it would make a lot more sense to liquidate and pay Aabar Options.

Aabar Options came about when about 1MDB had proposed to list 1MDB Energy Group in Bursa Malaysia through the buy back option.

The joint venture between Aabar BVI and 1MDB ended up not materialising, but was used by the sovereign wealth fund to raise its third bond, arranged by Goldman Sachs, totalling US$3 billion.

The former prime minister is being tried on four counts of power abuse to enrich himself and 21 counts of money-laundering involving RM2.3 billion in 1MDB funds.

The trial before judge Collin Lawrence Sequerah continues tomorrow. – September 2, 2020.