NAJIB Razak played a key role in an RM18 billion joint-venture deal between 1Malaysia Development Bhd and a subsidiary of the United Arab Emirates state investment vehicle shortly before the elections on May 9 last year, the Kuala Lumpur High Court heard this week.

Former 1MDB chief executive Shahrol Azral Ibrahim Halmi testified that the US$6 billion agreement, signed on March 12, 2013, was a major event as it was believed to be a government-to-government deal and involved strategic cooperation between the countries.

He said the deal was former prime minister Najib’s “baby” and had his “interest”.

The signing ceremony, held at the Prime Minister’s Office (PMO), was witnessed by Najib and Abu Dhabi Crown Prince Sheikh Mohamed Zayed Al Nahyan.

The joint venture was to be between 1MDB and Aabar Investment PJS, a subsidiary of International Petroleum Investment Co (IPIC), in equal shares to invest globally, including in the Kuala Lumpur International Financial District, which was later renamed Tun Razak Exchange.

The joint-venture company was called Abu Dhabi-Malaysia Investment Co, and IPIC was to guarantee Aabar’s investment, whereas Najib, who was also finance minister at the time, guaranteed 1MDB’s investment by way of a letter of support.

A loan of US$3 billion was later raised for the venture, with Goldman Sachs acting as the arranger. Two days after the venture’s signing ceremony, Najib inked a letter of support to raise a US$3 billion loan through the issuance of bonds by 1MDB from the Bank of New York Mellon Group.

A week later, US$2.721 billion was disbursed into 1MDB Global Investment Ltd’s account with BSI Bank in Lugano, Switzerland, while the balance went towards paying for Goldman Sach’s fee.

The venture’s operations, however, neither materialised nor brought income to 1MDB, Shahrol told the court.

Najib 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. He faces up to 20 years’ jail if convicted.

Najib gave nod for RM11.4 billion bond issuance, loan

Shahrol also testified that in 2012, Najib approved a bond issuance and loan valued at RM11.4 billion to finance the purchase of energy firm Tanjong Energy Holdings Ltd from tycoon Ananda Krishnan.

The former prime minister signed approval letters for a RM6.17 billion bridging loan and a US$1.75 billion (then RM5.23 billion) bond issuance to fund the acquisition of the independent power producer, the court heard.

Shahrol said he was not aware that 1MDB paid US$576.94 million in 2012 to a company owned by Low Taek Jho, better known as Jho Low, which was meant to be a security deposit for a corporate guarantee for the Tanjong Energy bond issuance.

The money was paid to Aabar Investment PJS Ltd (Aabar BVI) instead of Aabar Investment PJS.

Aabar BVI, which prosecutors said was controlled by Low and his associates, was based in the British Virgin Islands.

It also received a further US$790 million that was supposed to be a security deposit for a corporate guarantee for another bond issuance to purchase Genting Sanyen Sdn Bhd.

Shahrol said the funds were eventually transferred to Najib “to be used for fraud by others”.

Years later, when the 1MDB scandal broke, Shahrol said he was instructed by PMO to leave the country, to avoid a Public Accounts Committee (PAC) hearing in Parliament in 2015.

“(Then 1MDB CEO) Arul Kanda Kandasamy said PMO wanted us to hightail it out of the country before the meeting,” said the witness, adding that he left for Singapore.

To face the subsequent PAC hearings, Shahrol said he was coached by PAC members, including chairman Hasan Arifin.

He said prior to the hearing in 2015, he met Ahmad Farid Ridzuan, a PMO officer in charge of Najib’s image branding.

“I went to his house in Sri Hartamas (in Kuala Lumpur). At these meetings, some of the Barisan Nasional PAC members were in attendance.”

Shahrol, who resigned as 1MDB CEO on March 16, 2013, told the court: “I now realise that the pattern of leakages from 1MDB, from 2009 through 2013, had always been to borrow funds for projects that were ostensibly good for the nation, and to siphon off some of the borrowed funds.

“Throughout the years, the method used by the perpetrators has been refined and tightened up, in the sense that the talking points and mandated tight timelines for fundraising leave less and less room for discussion by the 1MDB management and board of directors.”

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

Former Federal Court judge Gopal Sri Ram leads the prosecution, while Kuala Lumpur High Court judge Collin Lawrence Sequerah presides.

The trial continues tomorrow. – October 6, 2019.