.jpg "Datuk Shahrol Azral Ibrahim Halmi is pictured at the Kuala Lumpur High Court July 15, 2020. u00e2u20acu201d Picture by Ahmad Zamzahuri")
KUALA LUMPUR, July 17 — The failure of 1Malaysia Development Berhad (1MDB) documents to include Abu Dhabi’s sovereign wealth fund IPIC’s name as the guarantor for a US$1.75 billion bond or borrowing by 1MDB was not intentionally done to hoodwink the 1MDB board of directors, the High Court heard today.
Former CEO of 1MDB, Datuk Shahrol Azral Ibrahim Halmi, today confirmed that IPIC’s name was omitted from several 1MDB papers in 2012, but said he had at that time signed off in good faith on the documents which he said were prepared by 1MDB’s in-house lawyer Jasmine Loo and 1MDB’s financial adviser for the bond, Goldman Sachs.
Shahrol was testifying as the ninth prosecution witness against Datuk Seri Najib Razak in the former prime minister’s power abuse and money-laundering trial over 1MDB funds.
Today, Najib’s lawyer Wan Aizuddin quizzed Shahrol on why these 1MDB documents had only mentioned 1MDB as the guarantor of the US$1.75 billion debt, when IPIC was also supposed to be the guarantor of the same borrowings.
When asked why an October 9, 2012 directors’ circular resolution (DCR) given to 1MDB board directors did not include IPIC as the guarantor, Shahrol said he had no comment as the document was prepared by Loo and not him.
Wan Aizuddin: To your best memory, the plan is still for IPIC to also give the guarantee.
Shahrol: Correct.
Wan Aizuddin: Then you would agree that IPIC would also be in this guarantee, it is a material fact that needs to be included in this DCR.
Shahrol: It would make sense, yeah… But yeah, I shouldn’t comment because this one Jasmine prepared it with the advice of Goldman Sachs.
Shahrol confirmed that he had not asked Loo why IPIC’s name was not included in the document as the guarantor of the US$1.75 billion bond.
Wan Aizuddin: I suggest because the guarantee by IPIC is not mentioned, the 1MDB board had in fact been hoodwinked, because this is a material fact that they should know when making the approval.
Shahrol: Disagree.
When highlighted to him that a trust deed — a separate document linked to the US$1.75 billion bond — had similarly failed to mention IPIC as the guarantor but only mentioned 1MDB as the guarantor, Shahrol again said this document was prepared by Loo on Goldman Sachs’ advice and that he had not noticed this omission at that time.
For this document, Shahrol said he recalled that Loo had only given him the signing page for his signature.
Noting that Loo sometimes only gave him the signing page for his signature as 1MDB CEO instead of handing him the complete set of documents, Shahrol said he had taken the documents in good faith.
But Wan Aizuddin pressed him on this, asking, “You are telling the court for this note of US$1.75 billion, a debt that 1MDB will be guaranteeing, you merely signed the signing page, not even looking at documents, you as the CEO, as head of management?”, to which Shahrol then replied: “Yes”.
Wan Aizuddin then suggested that Shahrol had allegedly taken this matter lightly intentionally due to him being purportedly part of an alleged scheme with fugitive businessman Low Taek Jho, Loo, Goldman Sachs and IPIC and IPIC subsidiary Aabar officials to “embezzle” money from 1MDB, also accusing Shahrol as 1MDB CEO and managing director of having failed to act in the best interests of the company and failed his fiduciary duty to the company by letting this happen.
But Shahrol disagreed with both accusations hurled by Wan Aizuddin.
Asked again regarding a separate bond-related document in October 2012 called a private placement memorandum where the US$1.75 billion bond was stated to be “unconditionally and irrevocably guaranteed by 1MDB” but without mentioning IPIC’s name, Shahrol again reiterated his previous explanation, stating: “As I said before, this document was prepared by Jasmine and Goldman Sachs and I took it on good faith that they prepared this professionally in the best interests of the company”.
Shahrol confirmed that he had not asked Loo why IPIC’s name was missing from the document as the guarantor, adding that he had not gone through it in detail and did not scrutinise it from a legal or financial aspect as he was focused on what the document described about 1MDB and its projects.
Previous 1MDB documents as early as August 2012 that were shown in court today had stated both IPIC and 1MDB as the intended guarantors of the US$1.75 billion bond.
Offshore company query
The US$1.75 billion 10-year bond was issued in 2012 by 1MDB’s Labuan-based subsidiary 1MDB Energy (Langat) Limited with a 5.75 per cent interest rate, with the guarantor having to pay up if 1MDB Energy (Langat) Limited defaults on payments to the bond subscriber.
When quizzed by Wan Aizuddin on why 1MDB had chosen to set up the 1MDB Energy (Langat) Limited in Labuan as an offshore company to issue the US$1.75 billion bond, Shahrol again said he did not raise further queries on the fundraising structure as advised by Goldman Sachs and as conveyed to him by Loo as 1MDB’s general counsel.
Shahrol said he did not have any reason to be suspicious of both Goldman Sachs and Loo at that time, and that everything had seemed in order.
Shahrol denied that the offshore company was set up as it would attract less scrutiny from Bank Negara Malaysia, as compared to if the company was set up as a Malaysian entity.
As for why 1MDB Energy (Langat) Limited had chosen to open its bank account at the Falcon Private Bank, Shahrol said he did not raise any questions as 1MDB had previously used this bank, but disagreed that he was instructed by Low to open the account there due to the bank’s chairman also being Aabar Investment PJS CEO Mohamed Badawy Al-Husseiny.
Shahrol denied that he was appointed as one of the authorised signatories for 1MDB Energy (Langat) Limited’s bank account there due to him purportedly being involved in a “premeditated plan” devised in conspiracy with Low, Loo, 1MDB official Terence Geh, IPIC and Aabar officials, Goldman Sachs to embezzle the Labuan-based company’s funds.
Scope of Najib’s role
Today, Wan Aizuddin challenged Shahrol’s assertion yesterday that he had believed there was a need to rush through 1MDB’s RM2.75 billion purchase of an independent power plant from a Genting unit — which included raising funds for the acquisition through the US$1.75 billion bond — before the 13th general election.
Shahrol had yesterday said he was made to understand that major decisions could not be undertaken once Parliament is dissolved and a caretaker government is put in place pending elections. As a company owned by the Finance Ministry’s MOF Inc, major decisions involving 1MDB matters then typically saw Najib signing off his approval in his role as finance minister on behalf of the government as the shareholder. 1MDB’s company constitution had also required the prime minister’s approval on major financial decisions.
Wan Aizuddin: Assuming for one minute, that your version about what Jho Low said, about all this story, about election coming up and you need to rush it. I put it to you that this story is just an excuse because even if the finance minister signs a shareholders’ resolution and the minutes of representatives, it’s just something that is needed to be done, and not because these purported big decisions cannot be done by a caretaker government.
Shahrol: Disagree.
Shahrol argued that once Najib signed his approval for 1MDB matters in his role as finance minister, he was deemed to have given his approval as the prime minister as he was wearing these hats at the same time.
Even with the 1MDB board’s approval of the RM2.75 billion purchase of the power plant, Shahrol disagreed that Najib’s subsequent signed approval as 1MDB shareholder would be a mere “formality”, but said it was still needed to legalise the decision.
Shahrol disagreed that Najib did not sign off on the RM2.75 billion purchase or for the 1MDB Energy (Langat) Limited to issue the US$1.75 billion bond, arguing that Najib had signed off on a broad approval for 1MDB to undertake the entire acquisition process and the transactions were proper.
The trial before High Court judge Collin Lawrence Sequerah will resume on August 3, where Najib’s lawyers are expected to continue cross-examining Shahrol.
