KUALA LUMPUR, Oct 14 — The prosecution today suggested that the real reason why charitable foundation Yayasan Akalbudi’s RM17.9 million was transferred to a law firm — where it is allegedly not even a client — was for Datuk Seri Ahmad Zahid Hamidi to help his daughter buy shares in a company that had a hotel in Bali, Indonesia.

Lead prosecutor Datuk Raja Rozela Raja Toran said this while arguing that the prosecution had proven a criminal breach of trust charge against Ahmad Zahid, who is a trustee of Yayasan Akalbudi and the sole authorised signatory for the foundation’s cheques.

The prosecution suggested that the RM17.9 million transfer from Yayasan Akalbudi’s fixed deposit accounts to the law firm Lewis & Co before the funds were eventually placed into fixed deposits was not for investment purposes, as a genuine investment would have instead seen Yayasan Akalbudi directly transferring and placing its fixed deposits in another bank if the intention was to seek higher interest rates.

Before Lewis & Co had placed the RM17.9 million received from Yayasan Akalbudi into fixed deposits, almost half of the funds or around RM8.6 million were initially used for Ahmad Zahid’s daughter Datuk Nurulhidayah’s share purchase deal before it was returned to the law firm after the deal fell through and then only placed into fixed deposits.

Yayasan Akalbudi is a foundation that was set up with the stated aim of eradicating poverty and enhancing the welfare of the poor, with Ahmad Zahid’s lawyers previously having tried to suggest to prosecution witnesses that the RM8.6 million used in the deal to buy the hotel operator’s shares was an “investment” by the charitable foundation.

But Raja Rozela highlighted the timing of these two transactions, pointing out that the RM17.9 million belonging to Yayasan Akalbudi was transferred into Lewis & Co’s client account on June 28, 2016, while Lewis & Co had issued out an RM8.6 million cheque to the hotel operator Ri-Yaz Assets Sdn Bhd on June 30, 2016 — which is just two days later — on Ahmad Zahid’s instructions.

“So that is why, My Lord, our contention is that the real purpose of the RM17.9 million withdrawal was to facilitate his daughter’s bid to buy a boutique hotel in Bali.

“Now, My Lord, even if for one lovely moment we were to accept that the RM17.9 million was a form of investment by Yayasan Akalbudi, the question is, how does running a boutique hotel in Indonesia help the poor people in Malaysia? If that was to be the true purpose?” she asked.

“On that note, My Lord, we humbly submit that the prosecution has proven this charge, that the accused had dishonestly misappropriated RM17.9 million, the funds from the seven fixed deposit accounts belonging to Akalbudi,” she said.

How the RM17.9m movement started

Raja Rozela said Ahmad Zahid had in a June 23, 2016 letter gave instructions to Affin Bank to withdraw all RM17,953,191.04 (RM17.9 million) of Yayasan Akalbudi funds in seven fixed deposit accounts (which had been opened between 2013 and 2016), and for these funds to be transferred to Lewis & Co via a bankers’ cheque.

Raja Rozela said the law firm’s partner Muralidharan Balan Pillai and its accounts clerk Sothilechmy Veerapan had both confirmed receiving the RM17.9 million cheque, with the law firm having recorded this in a June 27, 2016 entry in a ledger under a file opened under Ahmad Zahid’s family’s Yayasan Al-Falah’s name.

After the RM17.9 million was credited into Lewis & Co’s Maybank client account on June 28, 2016, Raja Rozela noted that the law firm had then on June 30, 2016 issued the RM8,602,920 (RM8.6 million) cheque on Ahmad Zahid’s instructions for the planned purchase of 60 per cent of shares in hotel operator Ri-Yaz Asset.

Raja Rozela then highlighted what the law firm’s partner Muralidharan had testified in court previously, including how he said he was told that the RM8.6 million cheque was for investment purposes and the type of questions that Ahmad Zahid’s lawyers had asked this witness.

Raja Rozela said Ahmad Zahid’s lawyers had asked questions to suggest that Ahmad Zahid’s daughter was being placed in Ri-Yaz to observe the “so-called investment” of Yayasan Akalbudi through the deal to buy 60 per cent of the hotel firm’s shares, but pointed out that the sales and purchase agreement did not state that Nurulhidayah is a “proxy” for Yayasan Akalbudi to enter into the share purchase deal.

“Now from all this, I think it is made clear, the real intention behind the transfer, our submission is that the accused had intended to transfer the RM17.9 million to use it or to use part of it for his personal benefit.

“The transfer was made under the pretext of an investment by Akalbudi, but from the line of questioning, we now know the real purpose was in fact to help his daughter to buy a hotel in Bali,” she said.

A red flag?

Raja Rozela said fixed deposits would be an example of investments that Yayasan Akalbudi is permitted to carry out under its company constitution as interest can be earned at a fixed rate, but said it did not make sense for the foundation’s fixed deposits to be transferred out to law firm Lewis & Co to be then placed into fixed deposits at another bank, as the money could have been transferred directly between banks under Yayasan Akalbudi’s name.

“Now bearing in mind the concept of investment, if you want to invest your money and earn as much interest, we will pick the bank that offers the highest interest rates for fixed deposits.

“So if it was pure investment purposes, I think it will make sense if the money is uplifted and then placed from Affin Bank into another bank, say Maybank or whatever bank that we have for the purpose of generating interest, for the purpose of earning more or higher interest rates,” she said. 

“But if it is an investment purpose and we want to generate interest, why move it to Lewis & Co? Why not open or make placement under Yayasan Akalbudi?” she asked.

Ahmad Zahid’s lawyers had argued that Yayasan Akalbudi remains the beneficial owner of the RM17.9 million even though it had been transferred to Lewis & Co, saying that this was because a trust had been created on behalf of Yayasan Akalbudi with the law firm acting as a trustee for the foundation.

But Raja Rozela argued that Ahmad Zahid himself could not entrust the RM17.9 million on behalf of Yayasan Akalbudi to the law firm, and said the foundation should be the one that directly entrusted the money to the law firm.

“That money, that trust, the property does not belong to the accused, it belongs to Yayasan Akalbudi. 

“So if there ever was taken to be an entrustment or to create entrustment between Akalbudi and Lewis & Co, it has to be by Akalbudi to Lewis & Co. 

“The accused does not have the right or is not entitled to pass the money to Lewis & Co, without any kind of arrangement and any kind of purpose clearly stated,” she said.

While acknowledging that money in Lewis & Co’s client account means the funds’ beneficial owner is still the law firm’s client, Raja Rozela said that Muralidharan had himself told the court that Yayasan Akalbudi was never his client.

“We must ask ourselves the next question, was Akalbudi a client? And the answer is no, the client’s account in Lewis & Co was opened under (Yayasan) Al-falah. The money comes from Akalbudi, so the purpose itself is already a question, is a red flag there,” she said.

“If the movement is to be taken as an investment of opening one fixed deposit account into another to earn interest, perhaps that is excusable. But here we already know that Akalbudi has absolutely nothing to do with Lewis & Co, or conversely Lewis & Co is not acting for Akalbudi, no contract, no other legal work that Akalbudi has instructed Lewis & Co to do to permit the money to be deposited into the (client’s) account, the account is for Al-falah,” she said.

Raja Rozela also noted that Ahmad Zahid’s lawyers had previously suggested in court to his former executive secretary Major Mazlina Mazlan @ Ramly that it was her negligence and carelessness that had caused Ahmad Zahid to shift the management of Yayasan Akalbudi’s funds to law firm Lewis & Co. (Mazlina had previously said that Ahmad Zahid had permitted the use of Yayasan Akalbudi cheques for other matters such as his credit card bill payments, although his lawyers have disputed this and sought to highlight her alleged negligence and mistake of not using Ahmad Zahid’s personal cheques.)

With Mazlina having disagreed with Ahmad Zahid’s lawyers’ suggestion on the reason for the RM17.9 million transfer, Raja Rozela questioned the defence’s argument by highlighting that it would have been easier to transfer out the secretary instead of to send it to a law firm in order to change the management of the funds.

“It is our contention that it defies credibility for the accused to suggest that transferring RM17.9 million was easier than transferring out the secretary,” she said.

Having questioned the purpose of the RM17.9 million transfer, Raja Rozela ultimately concluded it was to facilitate the purchase of shares in the hotel firm.

She had also highlighted that Ri-Yaz Group managing director Datuk Mohammad Shaheen Shah Mohd Sidek’s testimony as the 84th prosecution witness had shown active involvement by both Ahmad Zahid’s and his daughter over the share purchase deal, including several meetings that they had over the matter.

In this trial, Ahmad Zahid ― who is also a former home minister and currently the Umno president ― is facing 47 charges, namely 12 counts of criminal breach of trust in relation to charitable foundation Yayasan Akalbudi’s funds, 27 counts of money laundering, and eight counts of bribery charges.

One of the 12 criminal breach of trust charges involves Ahmad Zahid allegedly having transferred Yayasan Akalbudi’s RM17.9 million to Lewis & Co.

The trial before High Court judge Datuk Collin Lawrence Sequerah resumes on Monday.