THE Prime Minister’s office told 1Malaysia Development Berhad (1MDB) to take on more debt, despite the company’s balance sheet showing it was already RM32 billion in the red, the High Court in Kuala Lumpur heard today.

The orders were given by fugitive financier Low Taek Jho and an aide of Najib Razak, former chief executive officer Shahrol Azral Ibrahim Halmi told the court during the trial of Najib, the former prime minister accused of multiple counts of abuse of power and criminal breach of trust.

During cross-examination by Najib’s lawyer Wan Aizuddin Wan Mohamad, Shahrol said he was acting on instructions to go ahead with raising US$3 billion (RM12.6 billion) in bonds for the joint venture deal between Aabar Investments PJS Ltd (BVI) and 1MDB.

Shahrol said the instructions came from the Prime Minister’s Office (PMO) via Low – also known as Jho Low – and Azlin Alias, Najib’s former principal private secretary and the director of economics in the PMO, which oversaw 1MDB matters.

Wan Aizuddin: At the time, 1MDB had amassed a debt of RM32 billion, would it be prudent to take on another loan to eliminate the buyback action?

Shahrol: We were under instructions from the PMO and the shareholders to get it done.

Wan Aizuddin: How was this instruction given to you?

Shahrol: They were talking points passed to me by Low… there was also an email from Azlin detailing the final form of the joint venture and the initial public offering (IPO).

Shahrol also said he received instructions from Jho Low via talking points when he was no longer in 1MBD and was working for Pemandu on the sovereign wealth fund’s IPO.

He added there was also no go-ahead from the 1MDB board on the utilisation of the US$3 billion to finance the Tun Razak Exchange project.

Wan Aizuddin: You can also confirm that is no approval by 1MBD board of directors in relation to utilisation of US$3 billion bond?

Shahrol: There was no specific approval. However, there one time that [former 1MDB chief financial officer] Azmi [Tahir] updated the board, he said the funds will be placed with fund manager.

Wan Aizuddin: No general meeting about the utilisation?

Shahrol: Correct

Wan Aizuddin: There was no resolution for utilisation of the US$3 billion?

Shahrol: Correct.

Shahrol said the deal with Aabar Investments PJS Ltd (Aabar BVI) was pushed through despite the debt because of Low’s involvement.

Shahrol also denied pushing through the JV for his personal gain and denied having misled Najib.

Wan Aizuddin: You knowingly and actively participated in defrauding 1MDB by misleading the board, the [then] PM and the government of Malaysia.

Shahrol: I disagree.

Wan Aizuddin: You knowingly participated in concealing facts from the board of directors of 1MDB, the government and the [then] prime minister.

Shahrol: I disagree.

Wan Aizuddin: The embezzlement of funds out of the US$3 billion bonds was done with your full knowledge in cahoots with Jho Low and company, as well as Goldman Sachs.

Shahrol: I disagree.

It later emerged that Aabar BVI was a shell company registered in the British Virgin Islands and controlled by Low, and not an actual subsidiary of International Petroleum Investment Company (IPIC), which should have received the funds.

The joint venture between Aabar BVI and 1MDB ended up not materialising, but was used by the sovereign wealth fund to raise its third bond, arranged by Goldman Sachs, totalling US$3 billion.

Shahrol said Low got his way with the companies because he was Najib’s confidante.

The former prime minister is on trial for four counts of power abuse to enrich himself and 21 counts of laundering RM2.3 billion of 1MDB funds.

The trial before judge Collin Lawrence Sequerah continues tomorrow. – September 1, 2020.