Ex-1MDB CEO cites Jho Low’s instructions on alleged ‘boss’ Najib over signing of US$3b fundraising agreements without full documents in hand

Former 1MDB chief executive officer Mohd Hazem Abdul Rahman arrives at the Kuala Lumpur High Court May 17, 2021. — Picture by Miera Zulyana
Former 1MDB chief executive officer Mohd Hazem Abdul Rahman arrives at the Kuala Lumpur High Court May 17, 2021. — Picture by Miera Zulyana

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KUALA LUMPUR, May 17 — Former 1Malaysia Development Berhad (1MDB) CEO Mohd Hazem Abd Rahman today cited now-fugitive businessman Low Taek Jho and then prime minister Datuk Seri Najib Razak to justify his signing off in 2013 on agreements and other legal documents for a 1MDB subsidiary to take on a US$3 billion debt, without looking at the full agreements and with only the signing pages given to him then.

Mohd Hazem said this while testifying in court as the 10th prosecution witness in Najib’s power abuse and money laundering trial over more than RM2 billion of 1MDB funds. 

Under cross-examination by Najib’s lawyer Wan Aizuddin Wan Mohammed, Mohd Hazem said he had no choice but to sign off on the documents relating to the US$3 billion fundraising exercise through a bond issued by 1MDB Global Investments Limited (1MDB GIL).

Quizzed over several agreements which he had signed in March 2013 when only given the signing page and without being shown the actual agreements, Mohd Hazem confirmed that he had repeatedly said that these documents were part of Low’s plan and were instructions from Najib who had approved the issuance of the US$3 billion bond by 1MDB GIL to raise funds.

Mohd Hazem agreed with Wan Aizuddin that he had in 2013 viewed Low’s plan to be a business plan and concurred that the purported instructions from Najib were based on what Low verbally told him.

On all such documents which he signed with only the signing page in hand, Mohd Hazem confirmed however that he had not asked Najib whether the instructions given by Low were in fact Najib’s directions.

When Wan Aizuddin said Mohd Hazem’s duty as 1MDB CEO was to act in the best interests of the company, the latter said that this was true based on company law but also indicated the role of Low and Najib who was the prime minister then.

“Well, during that time, basically the boss of 1MDB is the prime minister as far as I can say and my assumption is that all these were planned by Jho Low who is a representative of the prime minister,” Mohd Hazem replied, confirming however that he had fiduciary duties in both 1MDB and also 1MDB GIL as he was also a 1MDB GIL director.

Wan Aizuddin then suggested that Mohd Hazem was not in the position to choose between acting in the best interests of the company or following Low’s instructions, based on his duty under the law to the company.

But Mohd Hazem replied: “I think the choice then, not only me, either you follow those instructions or quit from working with 1MDB.” 

Mohd Hazem agreed that he would be held liable “to a certain extent” under the law over the contents of the US$3 billion-linked fundraising agreements in 2013 which he signed off without seeing the full agreements but only the signing page, but said he had taken that the relevant officers and the bond issuance’s arranger Goldman Sachs would have done their due diligence to ensure that there would not be illegality in the agreements’ terms.

Mohd Hazem disagreed that the fundraising exercise would not have been possible if he had not signed these documents, saying: “Not really, I mean, if I don’t sign it, somebody else would sign it.”

He also disagreed with Wan Aizuddin’s suggestion that the documents that he had signed — while given only the signing pages to look at — played a pivotal role in the US$3 billion fundraising.

Mohd Hazem agreed that he had harboured suspicion about Low’s actual intentions for the fundraising exercise.

Asked by Wan Aizuddin over his alleged non-action on his suspicions such as by checking with Najib, Mohd Hazem said: “As far as I’m concerned, this is basically managed by the prime minister, so I leave it at that, the whole management and board members know about this.” He was referring to the 1MDB management and 1MDB board of directors.

Wan Aizuddin: All this was told to you by Jho Low?

Mohd Hazem: Yes.

Wan Aizuddin: You never felt the need of doing secondary checks with the prime minister?

Mohd Hazem: I think there’s no point of secondary checks, it’s either you follow or you quit the job, even if I quit my job, they will get somebody else to do it.

Wan Aizuddin: I put it to you, you were wilfully blind, you knew exactly what was happening but you walked into it anyway, in all your conduct in signing only the signing pages, although you harboured suspicion that something was amiss from the very beginning.

Mohd Hazem: I disagree.

1MDB GIL’s US$3 billion bond was originally intended to be injected into a British Virgin Islands-based joint venture company Abu Dhabi Malaysia Investment Company (Admic) formed in March 2013 between 1MDB and Aabar Investments PJS Limited (now said to be a fake company with similar name to an actual Abu Dhabi company).

The joint venture was later aborted and 1MDB GIL had to bear losses to make interest payments for the bond, with Mohd Hazem testifying last year that funds raised from the US$3 billion bond were used for matters such as paying a close to 10 per cent fee to Goldman Sachs over its role in the bond issuance, paying off 1MDB’s debts, and to buy land in Penang which featured in Najib’s election campaign speech.

On the first day of the trial, the prosecution had said it would show that more than US$1 billion of funds from the US$2.721 billion in 1MDB GIL’s accounts were channelled out to two funds that went through companies controlled by Low’s proxy Eric Tan with US$681 million allegedly eventually ending up in Najib’s account.

Mohd Hazem today shared his suspicion that Low was using the Admic joint venture as a reason to raise the funds of US$3 billion and to use the funds for other purposes, having confirmed that Low initially gave the impression that the fundraising had to be done hastily but subsequently appeared disinterested in the joint venture once the funds had been deposited in 1MDB GIL’s account.

Mohd Hazem was 1MDB CEO from March 2013 to early January 2015. He said that he had wanted to resign much earlier but was told to stay on until a replacement was found for him.

Among other things, Mohd Hazem said he had in the past shared his concerns about 1MDB to then 1MDB chairman Tan Sri Lodin Wok Kamaruddin and Najib’s then principal private secretary Datuk Azlin Alias.

Najib’s 1MDB trial before High Court judge Collin Lawrence Sequerah resumes this Wednesday, as Najib and his lawyers would be in Putrajaya tomorrow to attend the scheduled final day of hearing of his appeal against his conviction over RM42 million of ex-1MDB subsidiary SRC International Sdn Bhd’s funds.

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