FORMER prime minister Najib Razak advised against a second valuation of US$2.2 billion (RM9.2 billion) of assets allegedly owned by joint venture partner PetroSaudi International, the court heard today.

Former 1MDB CEO Shahrol Azral Ibrahim Halmi told the Kuala Lumpur High Court that Najib said a second valuation of PetroSaudi’s oil and gas properties in Argentina and Turkmenistan would have a “downside”.

The witness said Najib was consulted for advice in his capacity as the chairman of the 1MDB board of advisers on October 16, 2009 after US$1 billion was allegedly channelled to PetroSaudi Holdings (Caymans) Ltd and Good Star Ltd, which investigators later revealed were sham companies.

The first valuation was carried out by independent valuer Edward L. Morse, who was paid US$100,000 for his services, before a joint venture deal was signed between 1MDB and PetroSaudi International on September 25, 2009.

The 1MDB board of directors had raised questions on October 3, 2009, days after the US$1 billion was transferred in two payments.

Najib “advised there were more downsides in pursuing the second valuation”, said Shahrol.

“It was cemented in my mind that he preferred not to have a second valuation,” he added when cross-examined by lead defence counsel Muhammad Shafee Abdullah.

Shafee responded by saying that Najib never explicitly ordered the board against undertaking a second valuation but was merely expressing his opinion.  

Shahrol said Najib’s opinion nonetheless held weight.

“Realistically when the prime minister gives his own opinion, I think a lot of people think this is something that must be done,” Shahrol said.

Five days after the joint venture deal was signed on September 25, 2009, US$300 million was paid to PetroSaudi Holdings (Cayman) Ltd and the remaining US$700 million to Good Star Ltd without the board’s approval.
 
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 the joint bank account 1MDB opened with PetroSaudi Holdings (Cayman) Ltd under the name “JVCo”.

The remaining US$700 million was remitted to an account owned by Good Star Ltd, which was represented as a PetroSaudi International subsidiary but was later revealed to be a company controlled by Low Taek Jho, commonly known as Jho Low, whom prosecutors accused of conspiring with Najib to defraud 1MDB.

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. – October 29, 2019.