THE prosecution’s ninth witness, former 1Malaysia Development Bhd CEO Shahrol Azral Ibrahim Halmi, returns to the witness stand as Najib Razak’s trial enters its 22nd day today.

Shahrol will be cross-examined by lead defence counsel Muhammad Shafee Abullah for the 6th day.

Yesterday’s hearing was stalled when the accused skipped court to deliver a speech on the national budget.

On Monday, Shahrol denied conspiring with fugitive financier Low Taek Jho, commonly known as Jho Low, to obstruct an audit by the National Audit Department into the state investor fund.

Shahrol conceded that if a government audit had been allowed to proceed into the Terengganu Investment Authority, the precursor to 1MDB, in 2009, it would have discovered that funds from a RM5 billion bonds issuance had been misappropriated.  

He also agreed that 1MDB had transferred US$700 million (RM2.9 billion) to Good Star Ltd, supposedly PetroSaudi International Ltd’s joint venture partner, but which was actually controlled by Low.

Najib, 66, 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.

Prosecutors have accused him of conspiring with the Penang-born Low, who is on the run, 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 Kuala Lumpur High Court judge Collin Lawrence Sequerah.

The Malaysia Insight brings you today’s proceedings live:

4.35pm: Shafee questions Shahrol’s reliance on Tang regarding the joint venture.

The lawyer says the joint venture agreement was ultimately signed with PetroSaudi Holdings (Cayman) Ltd instead of the PetroSaudi International.

The former is a company based in the British Virgin Islands, which prosecutors said was used to defraud the state investor.

Shahrol says he relied on Tang’s legal experience and that he commanded the confidence of the board then.

The court adjourns to tomorrow morning.

4.20pm: Shafee refers to the director’s circular resolution that 1MDB participate in a joint venture via investment.

The resolution called for Shahrol and Tang to be appointed as interim directors of the joint venture company.

4.10pm: Shahrol refers to a board meeting on September 26, 2009 when Low received a phone call from Najib. The phone was then passed to former 1MDB chairman Bakke Salleh, who then spoke with the former prime minister in private.

Bakke later informed the board that the joint venture was something significant and resulted in fewer queries from the board on the matter, the witness said.

3.33pm: Shafee: Did you see his fingerprints here (in the joint venture deal), that Jho Low was a master manipulator? That was described by the previous witness Amhari Efendi Nazaruddin.

Shahrol: In my statement, I used the word orchestrator with slightly less negative connotations.

The part is very clear to me is that he is like a conductor in an orchestra where the different players playing their part without necessary knowing what the other players are doing.

3.16pm: Shahrol speaks of the assets supposedly owned by PetroSaudi in South America.

The witness says there were oil and gas assets in Argentina and Venezuela but cannot recall knowing more than that.

3.07pm: The witness says the Saudi government itself never verified the terms of the joint venture deal.

The 1MDB board never received annual reports from PetroSaudi. The board was also never given details about the Saudi company’s alleged previous projects in Europe, Latin America, and Central Asia.

2.54pm: The witness agrees with the defence’s suggestion that the board has no other source of information about the joint venture other than PetroSaudi. 

The lack of information extends to the nature of the so-called “prized assets” to be invested in locations such as Argentina, Turkmenistan and other countries.

2.39pm: Shafee refers to a position paper tendered in a board meeting on September 18, 2009, jointly prepared by 1MDB investment director Kelvin Tan and 1MDB chief investment officer Vincent Goh, and later reviewed by Tang and recommended for submission by the witness. 

Shahrol verifies the document.

The paper details 1MDB’s pledge to invest US$1 billion in a joint venture with PSI.

2.38pm: Hearing resumes.

12.45pm: Court breaks for lunch

12.25pm: The witness says as of September, 2009, he did not voice out any concerns about the 1MDB-PetroSaudi deal.

12.21pm: Shafee: Do you agree, professionals like you were to ensure that 1MDB did not get short-changed in the deal?

Shahrol: Within the parameters, yes. 

Shafee: Do you agree that despite meeting the Arab leaders, the hugs and kisses with the Arabs, that your job was to protect 1MDB? 

Shahrol: On that, I need to take into context with Article 117. 

Shafee: Do you agree that no matter how friendly the relationship between the two countries or leaders, you were supposed to protect 1MDB?

Shahrol: I was supposed to protect 1MDB taking in mind Article 117 puts very clear mandate on how I can (accomplish) that. 

12.20pm: Shafee asks whether 1MDB practised due diligence on the PetroSaudi deal. 

Shahrol says there was due diligence but it was not documented. 

12.07pm: Shafee goes over the minutes of a 1MDB special board meeting on September 18, 2009, which discussed the details of the joint venture.

11.51am: Shahrol says the crown prince of Saudi Arabia never did turn up to witness an inking of a deal between PSI and 1MDB.

11.27am:  Shafee refers to a letter from Ernst & Young, a third party auditor hired by 1MDB in September, 2009.

Witness says 1MDB investment and finance executive director Casey Tang said the firm was hired not only to offer opinion on tax issues but also to provide an accounting treatment for the deal.

11.26am: Hearing resumes

10.58am: Judge Sequerah allows a break

10.57am: Shafee asks whether due diligence took priority over meeting the September 28 deadline. 

Shahrol says the objective was to meet the target date and to complete the documentation. 

Shafee: Can you tell me what was the hurry?

Shahrol: The mandate was given to us to get it done by September 28. 

Shafee: We are going round in circles. It may sound flippant but I am asking a serious question. What is the hurry to get it done by September 28?

Shahrol: What was impressed upon me was that there would be a royal visit.

Shafee: Jho Low told you? 

Shahrol: Yes. 

Shafee: You have to sign it on the state visit? 

Shahrol: What was told to me was that the crown prince was supposed to come and that it was supposed to be witnessed by the crown prince. 

Shafee points out that that the royal visit reason was not mentioned in any documentation.

10.46am: Shafee asks the witness if he was certain there would be no undercutting or cheating. 

The witness replies, yes. 

Shafee: You assume that governments won’t cheat?

Shahrol: This was represented to me as something personal between Datuk Seri Najib and the king (Abdullah).

Shafee: Did you mean that Datuk Seri Najib’s personal relationship with the head of government of Saudi Arabia, would assist 1MDB’s venture with PSI?

Shahrol: I would go a step further to say that the 1MDB-PSI joint venture was created by this personal relationship. 

Shafee: Who told you that?

Shahrol: Jho (Low Taek Jho).

Shafee: He learnt this from where?

Shahrol: He was there apparently on the meeting on the yacht. He mentioned he was there at a discussion for a meeting on a yacht on one of the holidays.

Shahrol was referring to his previous testimony of an August 2009 meeting between Najib and PSI co-founder Prince Turki, on board a yacht in southern France. Low was also present.

10.41am: Shafee asks the witness what were the “prized assets” mentioned in the letter.

The witness says he was not aware the “prized assets” were.

Shafee: Weren’t you excited?

Shahrol: This was a deal being discussed between the two countries, seemingly between King Abdullah and Datuk Seri Najib. I was focused on getting the task done. I was indifferent to the ‘prized assets’

10.39am: PSI required that a joint venture agreement be signed on or before September 28, 2009, Shafee says, referring to a proposal letter.

10.38am:  This deal was to enable 1MDB to obtain a 40% stake in the joint venture project, says Shafee. 

Shahrol agrees.

The joint venture is into the energy sector.

10.34am: Shafee refers to 2009 agreement between PetroSaudi International (PSI) and 1MDB worth US$2.5 billion, in which 1MDB would inject a cash capital of US$1 billion.

PSI, on its part, would invest US$2 billion in assets, after which both firms would discount the value at US$1.5 billion only.

10.17am: Shahrol says Sultan Mizan’s sister Tengku Rahimah Almarhum Sultan Mahmud resigned from the board on May 27, 2009.

10:15am: Shafee remarks that the bonds issuance proceeded anyway even though the penalty for not doing so was merely RM500,000.

Shahrol earlier testified that he met the then Yang Di-Pertuan Agong Sultan Mizan Zainal Abidin, who expressed his displeasure over the bonds issuance. On May 27, 2009 an agreement with AmInvestment was signed to proceed with the bonds issuance.

10.10am: Shahrol says that on May 22, 2009, the TIA board of directors came to know of a resolution to suspend the bonds issuance and that on May 27, 2009, the shareholders came to know of the same.

9:59am: Shafee says one of the terms was RM500,000 compensation for AmInvestment in the event the agreement was terminated for any reason.

9.58am: Shafee asks the witness if he received legal advice on the agreement.

The witness replies, yes.

9.48am: Shahrol says the letter was to confirm the bank as principal adviser and lead arranger for the Islamic medium term notes programme, which sought to raise RM5 billion for the Terengganu Investment Authority. 

The witness says he signed a confirmation letter on April 6, 2009 agreeing to hire the bank and to the terms of engagement.

9.44am: Shafee continues cross-examination of witness Shahrol. The lawyer refers to a letter from AmInvestment to 1MDB dated April 3, 2009.

9.42am: Lead defence Shafee informs the court that Najib was absent yesterday as he was slotted with seven Barisan Nasional MPs to speak in parliament from 11am to noon.

The lawyer says the speaker Mohamad Ariff Md Yusof understood. Shafee says Najib lost his slot yesterday to Anwar Ibrahim.

9.40am: Court is in session.