PUTRAJAYA, April 22 — Local law firm Wong & Partners had cautioned 1Malaysia Development Berhad (1MDB) on the main legal risks before the government-owned company went ahead anyway to sign a US$1 billion deal in 2009 with an unscreened Cayman Islands-based company, the High Court heard today.
Brian Chia, 57, a retired lawyer and a former partner at Wong & Partners, said this as the 23rd defence witness in former prime minister Datuk Seri Najib Razak’s 1MDB trial.
The whole episode had taken place swiftly in just about two weeks, with Wong & Partners appointed on September 16, 2009 to help 1MDB check the joint venture deal, and the agreement’s first draft being prepared on September 25, 2009 and the deal being signed on September 28, 2009.
Chia said PetroSaudi group of companies’ UK law firm White & Case had prepared the US$1 billion joint venture agreement’s draft, which stated 1MDB’s deal partner as PetroSaudi Holdings (Cayman) Limited.
Previously, 1MDB’s former CEO Datuk Shahrol Azral Ibrahim Halmi said he had not been suspicious when the US$1 billion deal had stated the name of PetroSaudi Holdings (Cayman) Limited instead of 1MDB’s actual intended joint venture partner PetroSaudi International Ltd, as he said the agreement was prepared by an expert in 1MDB with the help of famous lawyers.
Chia today said he was “not familiar” with companies known as either “PetroSaudi International Ltd” or “PetroSaudi International Limited” when he was advising 1MDB, saying that the joint venture agreement had referred to “PetroSaudi International” as a company incorporated in the Cayman Islands.
Since 1MDB wanted to sign the deal by September 28, Chia said he had on September 26 gave his written legal advice to 1MDB to highlight key legal risks, including the fact that no legal due diligence had been carried out on PetroSaudi companies yet and the lack of time to do so.
Chia said 1MDB never asked Wong and Partners to carry out any corporate search or legal due diligence exercise on the PetroSaudi companies, but said the law firm did advise 1MDB to do so.
“Even if 1MDB had instructed Wong & Partners to do so, it would not have been possible to complete such exercises given 1MDB’s objective of signing the joint venture agreement by September 28, 2009, which is three calendar days from receipt from the first draft of the joint venture agreement on September 25, 2009, which was also a Friday,” he told the High Court.
He pointed out that company searches on companies incorporated in the Cayman Islands would have taken about one week at that time in 2009, and that Wong & Partners would not be able to do such searches on foreign companies without the help of external lawyers based abroad.
Chia said his role as an external lawyer then was only to warn 1MDB of risks on the US$1 billion deal, and that he left it to the Finance Ministry-owned company to make its own decisions based on its “commercial wisdom” and internal governance.
Instead of paying US$1 billion into the joint venture company, 1MDB ended up splitting the money into two transfers, including a US$700 million sum sent out on September 30, 2009 to a bank account now known as belonging to Low Taek Jho’s company Good Star Limited.
US$20 million from the US$700 million allegedly ended up in Najib’s personal bank account in 2011, but the former finance minister has insisted that the money equivalent to more than RM60 million were Saudi donations instead of 1MDB’s funds.
Shahrol previously said 1MDB had received nothing and not even a penny back from its purported US$1 billion “investment”.
Among other things, Chia today said Shahrol had in September 2009 told him that Low was 1MDB’s adviser, and he did not doubt what Shahrol said as the latter was 1MDB’s CEO and board member.
Brian Chia wasn’t missing, but was overseas
This morning, lawyer Haijan Omar clarified that his client Chia was not missing and unable to be located for the 1MDB trial as reported previously in February, noting that his client was abroad on holiday then and that he did not know that anyone was trying to reach him.
“The truth is that my client was never informed that he was to be a witness and was not aware of any efforts made to contact him,” Haijan said, adding that Chia is voluntarily assisting in the 1MDB trial as a witness and had immediately reached out to the prosecution upon his return to Malaysia.
“And he is in court today, ready to do his duty,” said Haijan, who together with lawyer Sofia Asyikin Mohd Kamil was holding a watching brief for Chia.
Shafee confirmed that Chia had attended all interviews that Najib’s lawyers had asked for to help with the preparations before his testimony in court.
Deputy public prosecutor Ahmad Akram Gharib explained that the prosecution was only informed at the “very last minute” that Chia was needed as a defence witness and were unable to contact him then, and that Najib’s lawyers had in February told the court that Chia could not be found based on the prosecution’s unsuccessful efforts then: “We don’t have malicious intentions (niat jahat), there is no mala fide there.”
At the end of today’s proceedings, Shafee said Goldman Sachs’ former banker Roger Ng is slated to be brought to court for the 1MDB trial tomorrow, and that there is a “possibility” that Najib might not even call him as a defence witness after interviewing him: “But the bigger probability is we call him.”
