PSI CEO Tarek took US$85m ‘commission’ for joint venture with 1MDB, Najib’s trial told

Lawyer Tan Sri Muhammad Shafee Abdullah is pictured at the Kuala Lumpur High Court in Kuala Lumpur Court October 30, 2019. ― Picture by Firdaus Latif
Lawyer Tan Sri Muhammad Shafee Abdullah is pictured at the Kuala Lumpur High Court in Kuala Lumpur Court October 30, 2019. ― Picture by Firdaus Latif

KUALA LUMPUR, Oct 30 — PetroSaudi International Limited (PSI) CEO Tarek Obaid had pocketed US$85 million as alleged “commission” for a joint venture deal with 1Malaysia Development Berhad (1MDB), the High Court heard today in Datuk Seri Najib Razak’s corruption trial.

Under the September 28, 2009 joint venture deal, 1MDB was to pay US$1 billion in cash, while PSI was supposed to put in US$1.5 billion worth of assets.

On September 30, 2009 which was when 1MDB was supposed to pay the US$1 billion into the joint venture company’s account, 1MDB instead followed instructions from PSI’s law firm White & Case on that day to pay it in two batches of US$300 million to the joint venture company and US$700 million to PSI’s purported affiliate Good Star Limited.

Datuk Seri Najib Razak’s lawyer Tan Sri Muhammad Shafee Abdullah today presented bank documents, which showed 1MDB’s September 30, 2009 payment of US$700 million to Good Star Limited’s RBS Coutts bank account.

Shafee also showed bank documents where US$85 million was paid from Good Star to Obaid’s JP Morgan bank account on October 5, 2009, noting that JP Morgan had recorded the incoming payment as “commission received by client for JV deal”.

In the trial today, Shafee asked former 1MDB CEO Datuk Shahrol Azral Ibrahim Halmi about the US$85 million, which the latter believed was referring to a commission for the joint venture with 1MDB.

Shafee: From what you know, can this be a bona fide commission or is this outright stealing?

Shahrol: Not enough information to determine.

Shahrol then calculated US$85 million as being slightly over 10 per cent of the US$700 million, before agreeing with Shafee that this sum of US$85 million was quite high as “commission” for a joint venture.

Shahrol said he was not aware that US$85 million was paid to Obaid in a matter of days after the US$700 million sum went out from 1MDB for “investment” in the joint venture, also confirming he had not known of this “commission” arrangement or that Good Star was actually owned by businessman Low Taek Jho.

Under the joint venture which was formed between 1MDB and PSI’s purported subsidiary PetroSaudi Holdings (Cayman) Limited, Obaid, Shahrol and several others sat in the board of directors for the joint venture company 1MDB PetroSaudi Limited.

But Shahrol today confirmed that he did not know of the conflict of interest posed by Obaid sitting on the joint venture company’s board, as Obaid did not declare having made a commission of US$85 million for the deal.

Patrick Mahony and PSI lawyers

Shafee also pointed out that Obaid’s bank account statement showed a US$33 million subsequently being paid out around October 20 to October 21, 2009 to his fellow PSI official Patrick Mahony, who also sat in the joint venture company’s board and was involved in dealings with 1MDB for the joint venture deal.

Shahrol said he did not know of these payments with Obaid taking US$85 million and channelling US$33 million to Mahony, and confirmed being surprised when told by Malaysian Anti-Corruption Commission (MACC) during 2018 investigations on 1MDB.

Shafee also pointed to the bank document showing Obaid as having made on around October 6, 2009 a payment £127,015.59 to PSI law firm White & Case.

Shahrol agreed with Shafee that it was “strange” for Obaid to be paying White & Case.

“Yes, the payment should have come from the company PetroSaudi Caymans,  or PetroSaudi International,” Shahrol said, agreeing that it was also possible that the payment should have been made by the joint venture company instead and that it was also possible that Obaid paid for legal services for his own personal interests and not the company’s.

Shahrol had previously testified that the US$1 billion that 1MDB paid for the “investment” —  in two batches of US$700 million and US$300 million —  into the joint venture resulted in zero returns for 1MDB.

The prosecution had previously said it would prove that US$20 million of the US$700 million eventually made its way from Low’s Good Star to Najib.

Shahrol is the ninth prosecution witness against Najib in the trial, and has been in the witness stand for more than two weeks so far.

The trial before High Court judge Collin Lawrence Sequerah resumes tomorrow at 2.30pm.

Najib’s trial involves 25 criminal charges — four counts of abusing his position for his own financial benefit totalling almost RM2.3 billion allegedly originating from 1MDB and the resulting 21 counts of money-laundering.

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