SIX promissory notes supposedly valued at US$2.32 billion (RM7 billion) and received by 1Malaysia Development Bhd for the sale of its stake in PetroSaudi Oil Services Ltd (PSOL) were essentially worthless, Kuala Lumpur High Court heard today.

1MDB received the notes from Cayman-island based Bridge Partners International Investment after the sovereign wealth fund sold its 49% equity US$2.2 billion stake in the PetroSaudi International subsidiary in August 2012, months after purchasing it, former 1MDB CEO Shahrol Azral Ibrahim Halmi said.

He was testifying in the trial of former prime minister Najib Razak, who is charged with money laundering and abuse of power involving RM2.3 billion of 1MDB funds.

A promissory note is a financial instrument, in which an issuer promises in writing to pay a determinate sum of money to the payee at a determined time.

When cross-examined by lead defence counsel Muhammad Shafee Abdullah, Shahrol was referred to findings by the US Department of Justice.

Shafee: With the benefit of hindsight, we now know they were worth nothing?

Shahrol: Correct.

Shafee: And you believe at that time, these promissory notes were real?

Shahrol: Yes.

Shafee: And you believed they had value?

Shahrol: Yes

Shafee: During the subsequent investigations, you realised they were only worth the paper they were printed on?

Shahrol: Yes

Shafee: Did you consult any lawyer pertaining these (notes)?

Shahrol: At that time, no.

Shafee then asked whether Shahrol was relying on information provided by the then 1MDB general counsel Jasmine Loo.

Shahrol confirmed he was, adding he also relied on suggestions from 1MDB intermediary figure Low Taek Jho, more commonly known as Jho Low.

Shahrol had testified earlier today that Loo had deliberately “confused” the 1MDB board over the 49% equity purchase.

The deal was supposedly to help repatriate money from a bogus joint venture deal with PetroSaudi International, where 1MDB transferred US$1.83 billion to entities later revealed to be sham companies controlled by Low or his associate, PetroSaudi International CEO Tarek Obaid.

Brazen Sky Ltd, a company incorporated in the British Virgin Islands (BVI), was set up by Low specifically to repatriate 1MDB’s stake in PSOL to Malaysia, Shahrol previously testified.

The repatriation was supposed to inject cash into domestic projects, including the Tun Razak Exchange and Bandar Malaysia developments, Shahrol testified in October.

A report by the US DOJ released in 2017 revealed that the promissory notes for the US$2.32 billion in “fund units” managed by Bridge Partners turned out to be “relatively worthless”.

Consistent with previous testimony, the witness today denied conspiring with Loo, Low or others to defraud 1MDB.

Najib is on trial for four counts of abusing his power to enrich himself with RM2.3 billion from 1MDB and 21 counts of laundering the same amount.

The Pekan MP, who turns 67 next month, faces up to 20 years’ imprisonment if convicted of the offences.

The trial, before justice Collin Lawrence Sequerah, resumes tomorrow. – June 30, 2020.