KUALA LUMPUR, May 17 — Datuk Seri Najib Razak as the finance minister and prime minister previously was also the one providing advice to 1Malaysia Development Berhad (1MDB), as 1MDB’s board of advisers — which he was chairing — had yet to be formally set up, the Finance Ministry-owned company’s former chairman told the High Court today.
Former 1MDB chairman Tan Sri Mohd Bakke Salleh said this while testifying as the 15th prosecution witness in Najib’s trial over the misappropriation of more than RM2 billion of 1MDB funds.
Bakke was chairman of 1MDB’s board of directors briefly, including from when the company was renamed from the Terengganu Investment Authority (TIA) in September 2009, until his resignation in October 2009 over his dissatisfaction with how the company’s management disobeyed the board of directors while handling a US$1 billion (RMinvestment.
The company constitution of 1MDB had contained provisions for a board of advisers to be set up with a minimum of four members and a maximum of four members and had also stated that the prime minister is to be one of the members and as the chairman of 1MDB’s board of advisers.
However, Bakke confirmed today that the 1MDB board of advisers had yet to be formalised by the time he resigned as 1MDB board of directors’ chairman on October 19, 2009, agreeing that this was a critical component of 1MDB as it was in the company’s constitution or Memorandum and Articles of Association.
Today, Najib’s lead defence lawyer Tan Sri Muhammad Shafee Abdullah insisted that there could not be a chairman of the board of advisers without such a board actually being set up, but Bakke said Najib had actually carried out such an advisory role in the latter’s capacity as finance minister and prime minister then.
Shafee: Unless the board of advisers is constituted, you agree with me there is no such independent office called chairman of board of advisers? The chairman of board of advisers is not an executive position that you can resort to without the board of advisers.
Bakke: Well, if you specifically look at that provision, yes I agree with you, but in the case of 1MDB, the prime minister, the minister of finance, the chairman of board of advisers, all very much you know, being intertwined and you know, being anchored and handled by one individual.
Shafee: So what’s your point?
Bakke: So it was supposed to be separate, a separate board in the case of board of advisers. But it was something that had not been formalised yet, and in the meantime, in the interim, the prime minister as well as the minister of finance took charge in the decision-making and I suppose plugged whatever gaps that existed to make things happen at 1MDB, so that the operations and the flow and the decisions would not be interrupted, so that’s who things panned out eventually.
While Shafee suggested that there was a “mixing up” of concepts and that he was only focusing on the board of advisers, Bakke then clarified that Najib was also playing the advisory role as the board of advisers for 1MDB was not set up yet.
“But you were saying because it was not formally constituted, the position of chairman was not there, in terms of executive, it doesn’t have any executive. That I agree with you.
“But as a result of not having a proper and sitting board of advisers then, decisions that were linked, or rather the role of providing advisory services, in my opinion, was handled by the prime minister who was also the minister of finance,” Bakke replied.
Shafee then said there were documents signed by 1MDB’s chairman of board of advisers, but argued that there is no such thing as an independent executive position of chairman of board of advisers if such a board was not formed.
Shafee when on to cite the specific provision in 1MDB’s company constitution on the chairman of board of advisers as having a limited role on passing advice from the board of advisers to 1MDB’s board, with Bakke then saying he could agree on this point based on what was enshrined in the company’s constitution.
Other prosecution witnesses such as former 1MDB director Tan Sri Ismee Ismail had in the past also told the High Court that they viewed Najib to be the same person wearing different hats as the prime minister, finance minister and chairman of 1MDB’s board of advisers.
Today, Shafee and Bakke also engaged in a brief war of words, with Bakke telling the lawyer not to put words in his mouth.
Shafee was suggesting that Bakke had previously said that perhaps he ought not to resign that fast as the 1MDB chairman, with the benefit of hindsight.
Bakke then cited what he had actually said previously on April 12 in a separate trial against Najib over the alleged tampering of the Auditor-General’s audit report on 1MDB, shooting back: “I didn’t say that, no, I think you are putting words in my mouth. My memory is still ok. What I said was, with benefit of hindsight, I should not have accepted the offer to serve on 1MDB.”
Shafee then sought to explain he was basing this on what Bakke had told Parliament’s bipartisan watchdog Public Accounts Committee (PAC) previously on February 11, 2016, saying: “Let me show you, I may be older than you, but I’m not having a mind that is not focused. You made statement in PAC, you stand by what you said in PAC?”
While confirming that he stood by what he told the PAC, Bakke also explained that he saw that the PAC’s report of the proceedings of the enquiry into 1MDB did not fully capture what he had testified, noting that “a lot of what I said was not reported” including a key condition that he had told the PAC about the US$1 billion investment.
“One of them when I also spelt out the four conditions that the money was to be credited to the joint account of 1MDB-PetroSaudi International that was not mentioned in the final report of PAC.
“So how it was recorded and the way my testimony was eventually written in the PAC report, I had no control, I had no oversight on that, doesn’t mean that what you read in PAC doesn’t mean it represents what I had said in that session,” Bakke explained.
Shafee suggested that Bakke seemed to be “very defensive” and remarked “are you aware you are a witness, not an accused person”, to which Bakke then said he just wanted to give his side of the story.
Shafee noted that Bakke had in the February 11, 2016 proceedings suggested that he was very angry after discovering that the 1MDB management had sent the US$1 billion in two tranches of US$700 million and US$300 million against the board’s orders, and that Bakke had said his reaction was to resign but, with the benefit of hindsight, might have done something else such as take action against the 1MDB management.
Bakke today said it was in an October 3, 2009 1MDB board meeting when the board was informed that the 1MDB money had been sent out with US$300 million going into a purported 1MDB-PetroSaudi joint venture account and US$700 million purportedly having been sent to PetroSaudi International’s account, noting that there “was a very unhappy, acrimonious exchange between the board and management” with then CEO Datuk Shahrol Azral Ibrahim Halmi just keeping quiet and looking worried about the board’s reaction.
Bakke said that it was midway through the next 1MDB board meeting on October 10, 2009 that the management had circulated a document known as Appendix A to explain events surrounding the US$1 billion investment for the purported joint venture, but described it as an “afterthought” that the 1MDB management had put together to supposedly make themselves look good.
“At that time I had already decided I didn’t want to have anything to do with management based on what happened, I distrust them. I had already written off management. So when they handed this out to us, midway through the board meeting, I didn’t even look at it — Appendix A,” he said, noting that he then resigned from the 1MDB board on October 19, 2009 and that the minutes for the October 10, 2009 board minutes was only approved in January 2010.
He said that he had only read Appendix A years later when he was shown the document when he gave his statement to the Malaysian Anti-Corruption Commission (MACC) to assist in investigations.
Shafee noted that the Appendix A mentioned that Saudi royalty Prince Turki had — via an August 28, 2009 letter to then prime minister Najib — committed to a signing date of September 28, 2009 for the joint venture deal between PetroSaudi and 1MDB, and that the chairman of board of advisers had subsequently communicated this September 28 deadline to the 1MDB management.
Agreeing that “it seems” from Appendix A that the 1MDB management obtained the letter from then prime minister Najib, Bakke confirmed however that the 1MDB board never saw this letter said to be sent from Prince Turki to Najib.
Agreeing with Shafee’s suggestion that the 1MDB management was in cahoots to mislead the 1MDB board in relation to the PetroSaudi matter and on an earlier RM5 billion Islamic bond, Bakke much later on agreed that it could be possible that Najib too was misled.
Shafee: I just want to put it, as much as the board was misled, the prime minister could have been easily misled by the management and an outsider called Jho Low.
Bakke: That is possible.
There were two sets of letters on August 28, 2009 where Prince Turki had wrote to Najib about a “potential business combination”, and where PetroSaudi International CEO Tarek Obaid had told Najib in detail about the proposed joint venture between PetroSaudi and 1MDB and stressed the proposed signing date on September 28, 2009.
However, Bakke said the 1MDB board was “taken by surprise” when first informed about the proposed joint venture during a board meeting on September 18, 2009, and that the board had asked a lot of questions and asked for due diligence as 1MDB “cannot simply commit our scarce resources to a project or a venture that we do not have the underlying details and don’t even know the background of the counter-party or the joint partner.”
At the next 1MDB board meeting on September 26, 2009, Bakke said the 1MDB’s board’s rhythm — as it was then waiting for the due diligence to be carried out by 1MDB’s management — was disturbed by a “critical twist of the event” which was when the “PM spoke to me after Jho Low called him and passed the handphone to me”.
Noting that Najib had said the joint venture had “been dragging on for some time” and there was a need to firm up a decision quickly, Bakke said the 1MDB board was “pressured” and pointed out that the 1MDB board had only known about the joint venture on September 18.
Bakke also disputed Najib’s claim that the matter had been dragging on, pointing out that it would be not more than a month if based on the date from the August 28, 2009 letter that was not supplied to the 1MDB board, and that this meant this was “not something that has been festering, dragging for a while”.
Earlier, Bakke said that normally a letter of such significant importance like the August 28, 2009 letter would also be copied to the chairman of the board of directors, to which Shafee then remarked: “You can’t blame the prime minister, he can’t go to the photocopy machine.”
Shafee sought to suggest that it was the 1MDB management that did not show or tell the 1MDB board about the letter, insisting that Najib cannot be faulted if the letter had not been given to Bakke.
The first time that Bakke had seen the August 28 letter by Tarek was during investigations by MACC in 2015 and 2016, agreeing that he was surprised when he first saw it.
Asked if the 1MDB board was suspicious then about the joint venture, Bakke said it was important to obtain external validation or verification on any information received when evaluating any project.
“At that time not suspicious, it’s just that we could not just accept anything that has been presented to us at face value, it’s imperative or incumbent on board to check things out, to verify all the information, to get external confirmation,” he said.
Bakke agreed that it was a “fair” assumption that either the 1MDB management was working hand in hand with Low or Low had also made misrepresentations about PetroSaudi to the 1MDB management, further agreeing that there was a possibility that Low and the 1MDB management could have misled the prime minister just as they misled the 1MDB board.
Shafee then remarked: “Especially in the case of the prime minister, he’s got a 1,001 things to do and he only looks at the most optimistic thing from the appearance.”
In the end, the 1MDB board had approved the joint venture deal with four conditions, but Bakke had said the 1MDB management failed to comply with the conditions.
Later in the afternoon, 1MDB’s former company secretary Lim Poh Seng resumed his testimony as the 18th prosecution witness in this trial.
Najib’s lawyer Wan Aizuddin Wan Mohammed asked Lim on whether he recalled the atmosphere during 1MDB’s board meeting on October 3, 2009, and whether it was acrimonious and whether there was any shouting or any visible dissatisfaction or visible animosity shown by board members towards the 1MDB management.
Lim then replied “to my recollection, it was just a robust board meeting.”
“It is what it is, the directors actively discuss. But again, I need to qualify, I attend many board meetings, robust board meetings are nothing new to me. So I can’t pinpoint whether it was more robust than others, because to me it was par for the course,” Lim added when asked to elaborate on what he meant by “robust”.
Najib’s 1MDB trial before High Court judge Datuk Collin Lawrence Sequerah resumes tomorrow.