1MDB persuaded to sign up for new deal despite PetroSaudi JV flop, court told

Bede Hong Timothy Achariam

Former 1MDB CEO Shahrol Azral Ibrahim Halmi has told the 1MDB trial that the sovereign wealth fund's management was persuaded to enter another joint venture with PetroSaudi International even though the first deal was dubious. – The Malaysian Insight pic by Hasnoor Hussain, November 4, 2019.

DESPITE a 2009 joint venture where US$1 billion was unaccountably channeled elsewhere, the 1Malaysia Development Bhd (1MDB) board was persuaded to enter another joint venture with PetroSaudi International the following year, the high court heard today.

Former 1MDB CEO Shahrol Azral Ibrahim Halmi testified that the board was persuaded to agree to a PSI proposal to jointly invest in a French energy firm GDF Seuz for 4.23% stake.

PSI, led by CEO Tarek Obaid then, proposed that 1MDB put up US$1 billion and promised the state investor fund would get a 20% discount. As with the 1MDB-PSI joint venture signed on September 25, 2009, this joint venture would also purportedly to be valued at US$2.5 billion.

Under cross-examination, Shahrol told the Kuala Lumpur High Court that 1MDB’s management pitched the venture to the board sometime in July 2010. The board was also pitched a second option for a 8.25%-interest rate in PSI Murabaha notes.

When prompted by lead defence counsel Muhammad Shafee Abdullah, Shahrol said the board was persuaded to agree to the second venture despite the fact that not a single board meeting with PSI has held since the 2009 joint venture.

“I am putting it to you that is the most bizarre thing for management to do unless there is dishonesty involved,” said Shafee, to which the witness disagreed.

On what he told the board, Sharol replied: “We were just presenting to the board – low risk, low returns, and high risk, high returns.”

In the previous joint venture deal signed on September 25, 2009, investigators revealed that US$300 million was paid to PetroSaudi Holdings (Cayman) Ltd and US$700 million, to Good Star Ltd.

PetroSaudi Holdings is not officially linked to the UAE-based PetroSaudi International while Good Star Ltd was later revealed to be controlled by fugitive businessman Low Taek Jho, commonly known as Jho Low.

Former prime minister Najib Razak, 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 to defraud the state investor.

Shahrol testified today that he never determined who actually owned PSI and that he was led to believe by Low that Tarek was linked to the Saudi royal family.

Shafee: Would you agree with me that if Najib came away with the impression that PSI is linked with the Saudi government, it could be from the same source, Low?

Shahrol: It is possible.

Shafee: And you would agree with me, as prime minister and whatever capacity he held, you can’t expect him to do the investigation and due diligence?

Shahrol: In general yes, but for this particular one, he has personally invested a lot in this relationship. He has personally met Prince Turki (in 2009) for example.

Former Federal Court judge Gopal Sri Ram leads the prosecution before judge Collin Lawrence Sequerah.

The trial continues tomorrow. – November 4, 2019.

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