Former 1MDB CEO says funds were transferred to a bogus company as security deposits for the acquisition of Tanjong Energy and Genting Sanyen

by RAHIMI YUNUS/ pic by ARIF KARTONO

1MALAYSIA Development Bhd (1MDB) transferred US$1.37 billion (RM5.74 billion) to a bogus company with a name similar to Aabar as part of multibillion capital raising and acquisition of two private power plants, a key witness told the Kuala Lumpur High Court yesterday.

Former 1MDB CEO Datuk Shahrol Azral Ibrahim Halmi said US$576 million and US$790 million respectively, were transferred to a bogus company as security deposits for the acquisition of Tanjong Energy Holding Sdn Bhd and Genting Sanyen (M) Sdn Bhd.

He said fugitive businessman Low Taek Jho, or popularly known as Jho Low, had arranged for the US$576,943,490 (US$576 million) security deposit payment to Aabar Investment PJS for the Tanjong Energy takeover.

Shahrol Azral who is a key prosecution witness in Datuk Seri Mohd Najib Razak’s trial, said 1MDB hatched the plan to invest the independent power producers (IPPs) in May 2010 to improve the country’s power sector and ease government’s subsidy burden.

He said a RM6.17 billion bridging loan and a US$1.75 billion bond issuance arranged to finance Tanjong Energy acquisition was completed on May 22, 2012.

1MDB’s unit, 1MDB Energy Sdn Bhd signed the RM6.17 billion facility agreement with Maybank Investment Bank Bhd and RHB Investment Bank Bhd on May 17, 2012, for the acquisition of Tanjong Energy.

1MDB Energy also issued US$1.75 billion guaranteed notes with Goldman Sachs Group Inc as a book runner and arranger to help finance the acquisition. The bond was also separately guaranteed by International Petroleum Investment Co (IPIC).

He said an option agreement was also inked between 1MDB Energy and IPIC’s subsidiary Aabar, whereby Aabar Investment PJS could subscribe to 49% of 1MDB Energy if the latter is listed on the stock market.

In return, 1MDB had to pay Aabar a security deposit of US$576 million.

The fund, however, was channelled to a bogus “Aabar” and not the IPIC’s unit. The real Aabar is Aabar Investment PJS, while the bogus “Aabar” carries “Ltd”.

The bogus “Aabar” was registered in the British Virgin Islands and is believed to be the vehicle to embezzle 1MDB funds.

Shahrol Azral said he did not realise the differences as a short form — Aabar Investments — and a correct address of Aabar Investment PJS in the United Arab Emirates were used in the agreement.

The prosecution’s witness said the US$576 million security deposit was never returned to 1MDB although 1MDB Energy planned listing fell through.

The acquisition of Genting Sanyen was completed via a RM700 million bridging loan from Affin Bank Bhd and the US$1.75 billion bond.

Shahrol Azral said US$790,354,855 was also channelled to the bogus “Aabar”.

He also revealed that Jho Low, Goldman Sachs top banker Tim Leissner and 1MDB legal counsel Jasmine Loo were key individuals in the acquisition of the two IPPs.

The trio were also instrumental in 1MDB’s real estate ventures with “Aabar” in the Kuala Lumpur International Financial District (KLIFD).

1MDB via 1MDB Global Investment Ltd (1MDB GIL) partnered “Aabar” to develop KLIFD through an equally split joint venture (JV). 1MDB GIL planned to raised US$3 billion bond for the JV.

“The original intent was for the 1MDB-Aabar JV to raise US$6 billion. This was reduced to US$3 billion alternative structure due to short of time and disagreeable terms,” Shahrol Azral said on Day 15 of the trial.

Shahrol Azral also revealed that Jho Low told him that “boss will bulldoze, don’t worry”, referring to Najib who would supposedly assist the Finance Ministry (MoF) to issue a Letter of Comfort (LoC) in relation to the bond.

The witness also said the US$3 billion fundraising had links with the 13th General Election based on what Jho Low had communicated to him.

The defence had repeatedly claimed that Shahrol Azral’s statements in relation to to Jho Low as hearsay.