KUALA LUMPUR, Nov 4 — The High Court today heard about 1Malaysia Development Berhad’s (1MDB) codenames for the mega projects of Bandar Malaysia at the former Sungai Besi airport, and the Kuala Lumpur International Financial District (KLIFD) or Tun Razak Exchange (TRX) as it is now known.
Revealing 1MDB board of directors’ internal code for the two projects, 1MDB former CEO Datuk Shahrol Azral Ibrahim Halmi also said that most of the money that 1MDB raised for Bandar Malaysia and TRX were actually channelled as loans to purported business partner PetroSaudi International (PSI) instead.
Referring to a 1MDB directors’ circular resolution dated June 1, 2010, Shahrol said “Big Cat” was the company’s code for the Sungai Besi redevelopment project now known as Bandar Malaysia.
“It was an internal joke because we wanted a codename that would mislead anybody who is eyeing the same land.
“As you know, the Sungai Besi land is extremely valuable to private developers, so we wanted to fly under the radar for this. ‘Wall Street’ is KLIFD,” Shahrol said during Datuk Seri Najib Razak’s corruption trial over 1MDB funds.
In the June 2010 document that was shown to Shahrol, the 1MDB board of directors had approved 1MDB to borrow RM5 billion using a bridging loan and also to borrow a further RM10 billion through 25-year medium-term notes for both the Bandar Malaysia and the TRX projects.
Quizzed by Najib’s lawyer Tan Sri Muhammad Shafee Abdullah, Shahrol confirmed that the attempt by 1MDB to take on a loan was based on agreements in principle that the company would be carrying out the two mega-projects.
“In principle, 1MDB has been tasked to undertake the development of both KLIFD now known as TRX, as well as the former Sungai Besi airport site,” he said.
When asked if the June 2010 resolution was passed even though the two projects were not yet firmly in 1MDB’s hands, Shahrol replied: “I would say already pretty firmed up, I think there were no doubts already in June 2010 that 1MDB would be doing these projects.”
Shahrol also cited the minutes of a 1MDB board meeting in July 2010, which he said showed the advanced stage of 1MDB discussions on the two projects.
“Because earlier the point on raising the funding was done on the basis of these two projects agreed to in principle. But this also shows actually that we had already progressed significantly along, even talking about what is the amount of compensation paid to the federal government for the land, as well as the issues surrounding making it free from encumbrances,” he said of the 1MDB records of board discussions on the TRX project.
Where the money raised went
Shahrol said that 1MDB eventually only borrowed less than the RM5 billion approved by the 1MDB board, and did not further take up the RM10 billion debt.
While having permission to borrow up to RM5 billion, 1MDB eventually borrowed US$330 million and over RM700 million ringgit, Shahrol said.
Shahrol said only a “tiny” portion of these funds raised were used for TRX, while the majority was loaned out to PSI.
Despite having seen zero returns from its initial US$1 billion “investment” into a 2009 joint venture with PSI, 1MDB would eventually go on to give out more money in separate loans totalling US$830 million to PSI. (Most of the money that 1MDB borrowed for the two mega-projects were part of the total US$830 million loans to PSI, based on Shahrol’s testimony.)
The prosecution has said that money that flowed from 1MDB on PSI’s instructions eventually made its way to various entities, including Najib’s purported adviser Low Taek Jho’s company and Najib himself.
Najib’s trial resumes before High Court judge Collin Lawrence Sequerah tomorrow morning.