NAJIB Razak ordered 1MDB’s board of directors to expedite a joint venture with PetroSaudi International in September 2009, the state fund’s former CEO told the high court today. 

Witness Shahrol Azral Ibrahim Halmi said the former prime minister wanted the venture completed quickly as there would soon be a working visit by the Saudi royal family where the matter would be discussed.

“Datuk Seri Najib ordered that the board speed up its decision and ‘firm up’ to approve the joint venture with PSI,” Shahrol said at Najib’s 1Malaysia Development Bhd trial.

“I was convinced that this was a matter of national interest, based on the prime minister’s instructions that came via Tan Sri Bakke (Salleh),” the witness said, referring to the 1MDB board chairman.

Najib 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.

During examination-in-chief this afternoon, Shahrol said it was during a special meeting on September 26, 2009 when 1MDB’s board of directors moved to back the joint venture.

Present at the meeting were Bakke and 1MDB intermediary Low Taek Jho, better known as Jho Low.

Prior to the meeting, Bakke told the board members that he had to take a phone call from Najib, said the witness.

“Soon after, he returned to sit with us again and informed the board that the joint venture with PSI was to be considered to be a matter of the highest importance, a government-to-government matter that has been mooted from quite some time back.”

Shahrol said two days after the meeting, on September 28, 2009, he signed a joint venture agreement between PetroSaudi Holdings (Cayman) Ltd and 1MDB PetroSaudi Ltd.

The witness, 49, told the court that the agreement was drafted by 1MDB’s lawyers from Wong & Partners, Low dan 1MDB executive director of business development Casey Tang.

In the joint venture worth US$2.5 billion, 1MBD was to inject capital of US$1 billion in cash for a 40% stake.

“I wasn’t immediately suspicious of the name PetroSaudi Holdings (Cayman) Ltd, which was different from the name PetroSaudi International Ltd, as it was prepared by 1MDB officers and renowned lawyers.”

Shahrol added that the details of the joint venture agreement were also provided by PSI’s lawyers, White & Case and PSI director Patrick Mahony.

PSI is owned by Prince Turki Abdullah Abdulaziz Al-Saud and its CEO, Tarek Obaid, the witness said.

“I signed the agreement based on the directive by Datuk Seri Najib, which I believe was to further our national interests.”

Of the US$1 billion 1MDB was supposed to inject into the joint venture company, US$300 million was wired to JP Morgan (Suisse) SA, which held a joint bank account 1MDB opened with PetroSaudi Holdings (Cayman) Limited under the name of JVCo.

The remaining US$700 million was remitted to an account owned by Good Star, purportedly as a cash advance from PSI to settle all amount owed by the JVCo to PSI, the witness said.

Shahrol testified that he learnt later that the US$700 million was transferred to a company controlled by Low. The witness said he was informed of Low’s ownership of Good Star during questioning by the Malaysian Anti-Corruption Commission last year.

Prosecutors have accused the fugitive Low of acting on behalf of Najib.

Angry Bakke resigns

Later, at another board of directors meeting on October 3, 2009, Bakke questioned Shahrol on the transfer of US$700 million to Good Star.

“Tan Sri Bakke questioned the transaction and demanded a justification as to why the entire US$1 billion was not transferred to the 1MDB-PetroSaudi joint venture company (JVCo). I explained that I carried out instructions by Jho Low, who told me that Good Star was owned by PSI and that the payment was a cash advance from PSI to the joint venture company.

“Tan Sri Bakke was dissatisfied with my explanation and he scolded me and the rest of the management, including Casey Tang, who had carried out the transaction. He then ordered us to retrieve the US$700 million from PSI as it did not enter the legitimate account.”

Bakke later resigned on October 19, 2009, Shahrol said. The money was never retrieved, he added.

When prompted by senior deputy public prosecutor Gopal Sri Ram, Shahrol said Najib never signed a joint venture agreement on behalf of the Malaysian government.

This was despite having purportedly met Saudi Arabia’s King Abdullah in July 2009 to strengthen relations between Malaysia and Saudi Arabia, he said.

The witness added that King Abdullah, who died in 2015, also never signed the agreement on behalf of the Saudi government.

Najib, who was chairman of 1MDB’s board of advisers, also never informed the board of directors the reason he did not sign a joint venture agreement, the witness said.

Najib is represented by a dozen lawyers led by Muhammad Shafee Abdullah.

Sri Ram, a former Federal Court judge, is leading the prosecution while Kuala Lumpur High Court judge Collin Lawrence Sequerah presides.

The trial resumes tomorrow. – September 25, 2019.