KUALA LUMPUR, July 11 — The hurried signing in 2009 of 1Malaysia Development Berhad’s (1MDB) now-aborted deal with PetroSaudi International (PSI) had led to two board members resigning from the Finance Ministry-owned company, investigators have revealed.

According to The Star today, former 1MDB chairman datuk Mohd Bakke Salleh and board member Tan Sri Azlan Mohd Zainol quit in protest after US$700 million (RM2.6 billion) that was meant for the 1MDB-PSI joint venture were diverted to another company without the board’s approval.

Quoting an investigator, the report said the board had directed that the money be returned to the JV company “but no action was taken”.

Bakke resigned on October 19, 2009, while Azlan left the board earlier this year on January 11, it said.


Again quoting investigators, the English daily said board members also felt the agreement with PSI to set up the JV firm was signed too hastily.

The report said the board was informed of the deal on September 18, 2009, and 10 days later on September 28, the agreement was inked with PetroSaudi Holdings (Cayman) Ltd, a wholly-owned subsidiary of PSI.

Initial findings by investigators, however, showed that there was no document on the existence of assets and valuation of PetroSaudi Holdings (Cayman) at the time the deal was signed.


In the agreement, 1MDB was to pay the subsidiary US$1 billion (RM3.5 billion) for a 40 per cent stake in the JV. The Star report said the board agreed to the deal and for the transfer of the cash to the account of the JV.

“However on September 30, only US$300 million (RM1.05 billion) of the total US$1 billion was actually transferred to the joint venture account while US$700 million was deposited into another account,” investigators were quoted in The Star’s report as saying.

The report said the US$700 million loan was extended as a loan to the JV company by PetroSaudi Holdings (Cayman) with the condition that it was to be repaid in full on September 30.

It added, however, that board members were not made aware of this although the loan agreement was made on September 25, three days before the JV deal was signed.

“The board members were unhappy that the agreement was signed without much consideration and that US$700 million meant for the JV company was transferred to another company without their approval,” the report said.

1MDB is currently under probe for alleged impropriety by at least three authorities, including Parliament’s Public Accounts Committee (PAC), the Auditor-General and the police.