KUALA LUMPUR, Jan 6 — A former CEO of 1Malaysia Development Berhad (1MDB) today told the High Court he considered former prime minister Datuk Seri Najib Razak to be the “ultimate boss” , and had assumed that the government-owned company’s contracts would be given to contractors with ties to then ruling party Umno.
Mohd Hazem Abd Rahman, who joined 1MDB as chief operating officer in August 2012 and was its CEO from March 2013 to early January 2015, was testifying today as the 10th prosecution witness in Najib’s money-laundering and power abuse trial over 1MDB funds.
Under cross-examination by Najib’s lawyer Tan Sri Muhammad Shafee Abdullah, Hazem said he had first heard from now-fugitive businessman Low Taek Jho that 1MDB’s formation and funds were for the benefit of Umno, during their first meeting at the Shangri-La Hotel in Putrajaya just before Hazem joined 1MDB.
Shafee then asked if Hazem had sought to verify Low’s remarks regarding 1MDB to benefit Umno, suggesting that some individuals would want to boast by making claims that they are doing things for the prime minister or Umno, but Hazem pointed out that Najib’s then principal private secretary Azlin was present in the same meeting and had listened to the conversation.
Asked by Shafee, Hazem agreed that he was fully aware at that time that 1MDB is a company fully-owned by the Malaysian government, and that Umno was not and still is not the company’s owner.
Shafee then asked if Hazem realised that there was “something wrong” or “seriously rotten” with the entire 1MDB affair, as 1MDB’s business is supposed to be for the benefit of its shareholder — the Malaysian government — instead of Umno, and if Low’s remarks alerted him that this was “crazy”.
“I realised that, this company is politically-linked in the sense that it would be used as a vehicle to raise funds,” Hazem replied.
While agreeing that he would not have known of the alleged intended benefits to Umno on that day if Low had not told him, Hazem said he believed he would still subsequently know about this from other individuals such as Azlin.
Shafee went on to suggest that Azlin had kept quiet and “did not expand on the vision of Umno to use 1MDB” when Low made his remarks, further suggesting that only Low whom he said was a “non-member of Umno who can never be a member of Umno tells you it is for the benefit of Umno”, with Hazem replying in the affirmative to both suggestions.
Shafee then asked if Hazem had realised on that day that this would all be against company law and corporate governance, with Hazem then noting: “I don’t know how the company will be used for fundraising, I have certain guesses, certain expectations, yes.”
Shafee: What was travelling in your head?
Hazem: Jho Low did highlight that this company would be involved in TRX. I presume some of the major contracts in the development would be given out to companies that have got political links, that is my expectation.
Shafee: So your expectation was quite innocent, I’m not saying you are innocent or naive, your expectation was you interpreted this consonant with law, namely what this guy meant, perhaps contracts in TRX or subcontracts can be given to Umno-linked companies?
Hazem: Yes.
However, Hazem also confirmed that he had not seen evidence of money stolen from 1MDB being sent to Umno.
Shafee: Have you seen any proof this money has gone back to Umno?
Hazem: During my time? In 1MDB? No.
Hazem confirmed that he had never enquired how Umno benefited from 1MDB, and further confirmed to Shafee that there were no contracts from 1MDB awarded to any Umno-linked person or company during his time with the company.
He agreed that Low could have made misrepresentations regarding 1MDB’s alleged intended benefit for Umno and that the now-fugitive had benefited much from 1MDB.
Hazem also described Low as the “mastermind” of a scheme to defraud the company and admitted in hindsight that he would have viewed Low with suspicion and be motivated to notify Najib of his concerns regarding the company.
At the same time, Hazem described Low as projecting himself as somebody who represented the prime minister and 1MDB, and a “soft-spoken” and confident person who appeared to be very sure of what he was talking about.
Hazem said he had believed Low as Najib’s special officers, including Azlin, knew him, and as the special officers told him that Low has “got access to the PM”.
Shafee sought to challenge the idea of Low having “access” to Najib by saying that the special officers could not confirm Low’s instructions came from the prime minister.
He further suggested that this amounted to hearsay or second-hand information that could not be verified to be true, but Hazem replied: “It becomes hearsay to you.”
Hazem confirmed that he had not checked Low’s remarks with Najib personally but again highlighted the prime minister’s special officers’ information, with Shafee then suggesting that this amounted to hearsay as Hazem was not relying directly on confirmation with the prime minister.
Among other things, Shafee argued that what Low had said could be hearsay, as it could not be verified as Azlin was now deceased.
Last year, Hazem had during the trial testified that Low was the trusted right-hand man of Najib and known to be the then prime minister’s “proxy” when it came to 1MDB affairs, with Low allegedly giving instructions on behalf of Najib.
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Today, Hazem agreed with Shafee that in hindsight that he had never expected that there would be a scheme where money would flow out of 1MDB and be sent back for the alleged political purpose of Najib, further agreeing that he would not have accepted being appointed to join 1MDB if he had known of the “outlandish” scheme to cheat and steal 1MDB funds.
Shafee then suggested that such a scheme would be bound to be easily discovered due to the volume of funds being sent out without returning.
In response, Hazem highlighted his own concerns when there were difficulties in bringing back 1MDB’s overseas funds to Malaysia: “Well, during my tenure, I had a lot of concerns with regards to all these funds that were requested to come back… but didn’t come back, that raised the concern.”
Confirming that he had never expected 1MDB to be subsequently caught up in a scheme where the company was cheated and had its funds stolen with billions of ringgit flowing out, Hazem said he sought to convey his concerns over the company’s operations to Najib via then 1MDB chairman Tan Sri Lodin Wok Kamaruddin.
Hazem said his access then to Najib was via Azlin and also Lodin, noting that Lodin shared the same concerns over 1MDB operations. Hazem said he could have asked Azlin for a personal meeting with Najib but did not do so, and had instead asked Lodin to raise the concerns with Najib.
While Hazem confirmed that he did not have meetings — either one-on-one or with others — with Najib to convey his concerns, he pointed out that concerns about how 1MDB was operated was also known publicly through the media and newspapers and also via the bipartisan parliamentary watchdog Public Accounts Committee.
“Datuk Seri Najib as the prime minister, as the representative in charge of 1MDB would have known that something was going on. It was raised in Parliament,” Hazem said.
Shafee then said that it could not be said that some MPs are always telling the truth and that there is “a lot of drama in Parliament”, adding: “You can’t say this was raised in Parliament, therefore I don’t need to raise this to my boss.”
Noting Najib’s roles in relation to 1MDB, Shafee said: “He’s just like your boss in a way.”
“He’s the ultimate boss,” Hazem replied.
Najib was not only the prime minister and finance minister then, but was also chairman of 1MDB’s board of advisers, and was also the representative who signed off on approvals for 1MDB matters on behalf of the company’s shareholder MOF Inc due to his position as finance minister.
Hazem had yesterday said that Najib as the prime minister was the one ultimately running the show at 1MDB as the company’s shareholder is the government, and that in reality he would not have been able to just resist instructions from Najib if there were any that went against 1MDB’s interests.
Last year, Hazem had also testified during the trial of how he had felt something was wrong with how 1MDB’s purported funds abroad were being handled, and how he had wanted to resign just months into his CEO job as he felt 1MDB was caught in the biggest trap in corporate history, and how he had asked to be replaced as even his officers did not want the CEO position.
The trial before High Court judge Collin Lawrence Sequerah resumes tomorrow.
