KUALA LUMPUR, Oct 24 — Datuk Shahrol Azral Ibrahim Halmi asserted in the High Court today that he has acted responsibly and honestly in performing his fiduciary duty during his tenure as 1Malaysia Development Berhad (1MDB) chief executive.
Testifying against Datuk Seri Najib Razak in the latter’s 1MDB corruption trial, Shahrol was grilled by defence lawyer Tan Sri Muhammad Shafee Abdullah on why he did not consult the board before signing a 2009 joint venture agreement between 1MDB and purported Saudi-linked business partner PetroSaudi International Ltd’s (PSI) supposed Cayman-based subsidiary despite irregularities.
Shahrol had revealed in court over the past few weeks, and even reiterated today that the deal was done in a hurried manner because he perceived it to be for the good of the country and that fugitive financier Low Taek Jho had given the impression it was also what Najib wanted.
Shafee then asked Shahrol whether he understood what his fiduciary duty to the 1MDB board entails and whether he had acted in the company’s best interests.
Shafee: You owe a duty to the board as a collective duty, do you know what kind of duty is that?
Shahrol: Fiduciary...
Shafee: Do you understand the word fiduciary?
Shahrol: Financial duty.
Shafee: No, that is not what It means. Fiduciary is a duty to be candid, truthful and honest to the board and the company.
Shahrol: Well, I was honest and transparent...
Shafee: No, no, no, I’m not asking that. We can conclude that later. The honourable judge can conclude whether you are honest or not. How can you not understand the fiduciary duty of a director?
Shahrol: I do.
Shafee: Yet, you didn’t know what it means. I’m putting it to you that you don’t seem to care about your fiduciary duty to the board.
Shahrol: I disagree.
Shafee also questioned Shahrol why 1MDB had accepted the September 29, 2009 valuation report by US banker Edward L. Morse, who had estimated PSI’s value to be worth US$3 billion.
Shafee had questioned Morse’s impartiality in the valuation as it was revealed in court that PSI had in fact hired the banker in the past.
Earlier this month, Shafee had asked Shahrol why the deal was signed just a month after it was presented to the 1MDB board of directors in August 2009.
Leading up to the hasty deal was the 1MDB board of directors’ meeting on September 26, 2009 to decide whether to go ahead with the deal to form a joint venture company, just two days before the deal was signed between 1MDB and PetroSaudi Holdings (Cayman) Ltd on September 28, 2009.
1MDB had then paid US$1 billion to secure its stake in the joint venture company, with this amount split into US$700 million and US$300 million.
The US$700 million went to one Good Star Ltd, a firm that investigators say whose main beneficiary is Low. The prosecution has also said that US$20 million of the US$700 million allegedly reached Najib eventually.
