KUALA LUMPUR, Oct 29 — Datuk Seri Najib Razak did give advice as the chairman of the board of advisers for 1Malaysia Development Berhad (1MDB), but many would in reality have taken his opinion as requiring execution as he was also the prime minister, the High Court heard today.
Datuk Shahrol Azral Ibrahim Halmi, who was formerly 1MDB CEO, spoke about Najib’s advice in cautioning against getting a second valuation of assets alleging belonging to 1MDB’s purported business partner PetroSaudi International (PSI) Limited.
The speedy deal and poser over valuation
In late September 2009, 1MDB had entered into a joint venture where it pumped in US$1 billion in cash, while PSI had committed to put in US$1.5 billion worth of assets in the joint venture. (1MDB decided on September 26, 2009 to go ahead with the deal.)
In the speedy joint venture deal that 1MDB eventually signed on September 28, 2009 with PSI’s purported subsidiary PetroSaudi Holdings (Cayman) Ltd, 1MDB was only given two days to cancel the deal and not go ahead to pay US$1 billion if PSI assets fell below the US$1.5 billion value committed.
Valuer Edward L. Morse then gave 1MDB a September 29, 2009 valuation report on the PSI assets’ estimated value based on figures given by PSI itself, while 1MDB then paid out US$1 billion on September 30, 2009 to fulfil its part of the debt.
The High Court today heard that 1MDB board of directors had on September 26, 2009 and October 3, 2009 expressed concerns over the speed of the deal and Morse’s impartiality, and that the board had also expressed interest to look for a second independent valuation and tasked Shahrol with discussing the matter of PSI assets’ valuation with then prime minister Najib.
The PM’s words
Shahrol today then read out the minutes of his October 16, 2009 meeting as 1MDB CEO with Najib as the chairman of 1MDB’s board of advisers, noting that Najib had said a “second valuation may prove to have more downsides than upsides” after considering all potential factors including political, bilateral ties and risks.
“That means that a second valuation is not preferred,” Shahrol said of his understanding of Najib’s opinion.
While Najib’s lawyer Tan Sri Muhammad Shafee Abdullah argued that Najib was expressing his view as 1MDB board of advisers’ chairman, Shahrol replied: “That cemented in my mind that this is again very important to him and also he prefers not to have second valuation, that’s my takeaway.”
Shafee: This is his opinion, you are supposed to take the opinion and take it back to the board.
Shahrol: Realistically, when the prime minister gives advice or opinion, I think a lot of people would also think that is something that must be achieved.
Shahrol pointed out that the 1MDB board had asked him to seek Najib’s advice, but also confirmed that he did not formally raise Najib’s comment in a subsequent board meeting and that no decision was made to appoint a second valuer with 1MDB never pursuing the matter further.
Shahrol confirmed that PSI was said to have made a “counter-offer”, where 1MDB was told that it could cost the company more if a second valuation was to be done and PSI assets were found to be higher in value than originally estimated.
The High Court heard last week how the PSI via its purported Cayman Islands-based subsidiary had actually only put in US$108 million worth of assets out of the US$1.5 billion into the joint venture, as PSI did not even own the rest of the assets it claimed to own.
Shafee today focused on how US$700 million of the US$1 billion that 1MDB paid out in 2009 was diverted to Good Star Limited.
(Shahrol said he had not known then that Good Star Limited was owned by businessman Low Taek Jho and which PSI claimed was its subsidiary.)
In speaking of his October 16, 2009 meeting alone with Najib, Shahrol insisted that he had briefed Najib about the US$700 million.
When Shafee noted that the meeting minutes did not record the raising of the US$700 million issue, Shahrol said he would have recorded its verbal mention but noted that the written minutes was prepared in advance by Low.
“He is in the words of the prosecution, the mirror image of the prime minister at that time,” Shahrol said when asked if Low was the CEO or even “shadow CEO” of 1MDB.
Having said that he had then saw Low as the “main facilitator” for Najib, Shahrol said the businessman was the one who had made the arrangements for the meeting with Najib and prepared the advance minutes of meeting.
Shahrol pointed out that he would have been more cautious about PSI’s assets and carried out a second valuation if Najib had said so then, when highlighting how the meeting minutes was matched by Najib’s subsequent actions.
“But Datuk Seri Najib went through it and if he didn’t want to sign it...I would have taken it on board and I would not have signed it,” he said of the meeting minutes.
Today is Day 26 of the trial, in which the prosecution had previously said it would prove US$20 million of the US$700 million diverted to Good Star eventually made its way allegedly to Najib.
Last Thursday, Shahrol had also spoken in court about his state of mind as 1MDB CEO when ensuring the completion of the company’s deal with PSI within a tight timeline.
“I think it’s important to set the context by which why the decision on the PSI deal was done quickly and I bulldozed everything through. In a nutshell, I believed this is what Datuk Seri Najib wanted and the difference between 1MDB and Datuk Seri Najib didn’t exist in my mind at that time. 1MDB was Datuk Seri Najib and Datuk Seri Najib was 1MDB and whatever he wanted done, I needed to get done,” Shahrol had said then.
Najib’s trial before High Court judge Collin Lawrence Sequerah resumes tomorrow at 11am.