KUALA LUMPUR, June 30 — Businessman Low Taek Jho was the one who had instructed on what is now apparently a plot to prevent 1Malaysia Development Berhad’s (1MDB) board of directors from finding out that the company’s overseas “investment” worth billions of ringgit was in fact lost and only had value on paper and could not be brought back as cash to Malaysia, the company’s former CEO told the court today.
1MDB former CEO Datuk Shahrol Azral Ibrahim Halmi however insisted that he was not involved in the scheme allegedly perpetrated by Low, and that he had not known at that time of the scheme but had believed Low to be conveying the wishes of then finance minister Datuk Seri Najib Razak as the government-owned company’s shareholder via MOF Inc.
Shahrol Azral, who was testifying as the prosecution’s ninth witness against Najib in the latter’s trial over 1MDB funds, also said he did not know if the former prime minister had also been “hoodwinked” over 1MDB transactions.
Today, Najib’s lawyer Tan Sri Muhammad Shafee Abdullah quizzed Shahrol Azral over a series of complex transactions that 1MDB had engaged in since 2012 as part of efforts to repatriate or bring back the company’s investment abroad via a loan worth a purported US$1.83 billion.
Shafee went on to scrutinise how 1MDB had converted and restructured its “loan” of US$1.83 billion as an investment related to Saudi-linked company PetroSaudi International Ltd (PSI) into different forms of investment on paper and without actually getting the full sum in cash back to 1MDB.
Shafee highlighted that the US Department of Justice (DoJ) had said such restructuring made it easier to obscure the value of 1MDB’s investment in its purported joint venture with PSI.
Shahrol Azral then agreed with Shafee that in “hindsight” that the multiple restructuring of 1MDB’s investment abroad was a mechanism to hoodwink the 1MDB board into believing that the company’s investment was still secure.
Shafee: And the board got hoodwinked, because now that we know, that it is not worth the paper it was written on.
Shahrol Azral: Correct.
Shafee: Now I suppose one question I must ask you, because it’s not something that I can resist, if the whole board can be hoodwinked, can I ask you whether the prime minister or the finance minister would be in a position to be wiser than the board?
Shahrol Azral: I cannot comment on that, because I do not know at that time whether the finance minister had more information than the board.
When asked regarding yet another restructuring of the form of investment of the 1MDB funds that were supposed to have been brought back to Malaysia, Shahrol Azral again agreed in hindsight that it was to hide the board from knowing the true value of the purported investment.
When asked by Shafee if he agreed that the scheme was “beyond the knowledge” of Najib as the then prime minister or finance minister as the 1MDB board itself did not know of it, Shahrol Azral said he could not comment on this while further explaining that the board had only been aware that this was part of the process to repatriate 1MDB funds.
Shafee: You have no evidence to present to this court that the prime minister or finance minister is aware of this transaction?
Shahrol Azral: I’m not aware of this.
Quizzed further on yet another transaction linked to the funds, Shahrol Azral said he was not aware of the “hoodwinking” that was being carried out on the 1MDB board and agreed that he would have informed the board if he had known and asked them to inform the prime minister.
When asked by Shafee if he would have urged the board to alert Najib if he had known of the scheme allegedly perpetrated by Low together with 1MDB lawyer Jasmine Loo and 1MDB deputy chief financial officer Terence Geh, Shahrol Azral agreed.
Insisting that he was not involved in the alleged scheme to hoodwink the 1MDB board, Shahrol Azral had among other things said that he had taken Low and Loo at their word regarding the transaction as he trusted them then, noting that Loo was a senior member of 1MDB as the company’s general counsel and in charge of the overall restructuring exercise regarding the transactions.
“Expectations were already set that this was going to happen, when Jho set out what will happen...so it all happened according to his plan and I continued to trust he had things under control and he’s acting in the best interest of the company and ultimately the shareholder --- the prime minister,” Shahrol Azral said, referring to Low who he had previously described as an individual believed to be Najib’s trusted adviser.
Shahrol Azral disagreed with Shafee’s suggestion that he had made joint decisions with Low to carry out the various 1MDB transactions, insisting that the whole scheme was orchestrated by both Low and Loo with Geh acting as a “foot soldier”.
“I was totally fine to let Jasmine and Jho to manage the process because I believed they had already consulted with Datuk Seri Najib and this was something that had already been agreed on,” Shahrol Azral said of an incident where Loo obtained Najib’s signature of approval regarding the transfer of 1MDB funds on paper into a purported hedge fund.
Among other things, Shafee accused Shahrol Azral of repeatedly blaming others and of having purportedly acted together with Low, but Shahrol Azral denied such accusations and argued that his actions were based on the professional judgment and advice given by Loo and Geh which he said tallied with Low’s action plans.
Shafee also accused 1MDB of having constantly restructured its financial arrangements regarding its overseas “investment” like a “magic show” and “rub of the lamp” to avoid answering to the company’s external auditors, with Shahrol Azral agreeing that one such transaction was done with this intention of avoiding explanations to auditors.
Shafee: Who’s the genius behind this?
Shahrol Azral: Jho.
Shafee: Not Datuk Seri Najib?
Shahrol Azral: I wouldn’t know.
Shafee also accused Shahrol Azral of delegating his responsibilities as CEO to others, but Shahrol said he had CFO and auditors to assist him in 1MDB’s financial matters as he was not financially trained.
Shafee also accused Shahrol Azral of having also in this trial “delegated blame” to Low, Loo and by suggesting that Najib would have been aware due to alleged close ties with Low, but Shahrol said he was merely “stating the facts” regarding the 1MDB events.
Shahrol Azral also confirmed that he had assumed that Low was telling the truth when claiming that Najib had agreed on a deal for US$2.318 billion promissory notes to be issued to 1MDB subsidiary Brazen Sky Limited, but confirmed he had not personally checked with Najib on this. The promissory notes where a promise was made for 1MDB subsidiary to be paid US$2.318 billion were later revealed to be worthless.
When suggested by Shafee that Shahrol Azral’s testimony appeared to show Low as the “shadow director” of 1MDB instead of Najib, Shahrol Azral agreed that he had repeatedly said he took instructions from Low on 1MDB affairs as he believed the businessman was acting on behalf of then finance minister Najib as the shareholder and as he believed the instructions to be Najib’s instructions.
Shahrol Azral however also confirmed that he did not brief the 1MDB board that he was accustomed to receiving instructions from Low.
The trial before High Court judge Collin Lawrence Sequerah resumes this afternoon.