Shahrol Azral testifies that certain documents in the restructuring deal had been made to hoodwink the directors
by RAHIMI YUNUS/ pic by ARIF KARTONO
FORMER 1Malaysia Development Bhd (1MDB) CEO Datuk Shahrol Azral Ibrahim Halmi (picture) told the High Court that certain documents in the restructuring exercise to repatriate the company’s funds were deemed to have deceived the board.
In former Prime Minister (PM) Datuk Seri Mohd Najib Razak’s 1MDB trial, Shahrol Azral testified that certain documents in the restructuring deal, whereby 1MDB sold its 49% stake in PetroSaudi Oil Services Ltd in exchange for trust units, had been made to hoodwink the directors.
The fund units were later believed to be worth nothing, he said in the cross-examination by Najib’s lead defence counsel Tan Sri Dr Muhammad Shafee Abdullah. 1MDB embarked on the corporate exercise, which was handled by the company’s general counsel Jasmine Loo Ai Swan and overseen by Low Taek Jho or Jho Low, to retrieve US$2.2 billion (RM9.42 billion), part of its investment in PetroSaudi International Ltd (PSI) joint venture (JV).
Muhammad Shafee: All these restructurings, the whole idea was to make it more difficult for the board members to know the true value of the investment.
Shahrol Azral: Yes.
Muhammad Shafee: And the board got hoodwinked, because now we know that it is not worth the paper it was written on.
Shahrol Azral: Correct.
Muhammad Shafee: If the whole board can be hoodwinked, can I ask you whether the PM or the finance minister would be in a position to be wiser than the board?
Shahrol Azral: I cannot comment on that because I do not know at that time whether the finance minister had more information than the board.
The ninth prosecution witness agreed that the paperwork involved in the restructuring deals had been crafted to mislead the board about the true value of the purported investment, but he denied taking part in the discussion of the scheme.
Shahrol Azral said he did not go on the valuation of the notes, but trusted Loo and Low in good faith.
As it is, both Loo and Low are now missing.
In 2009, 1MDB entered the PSI JV by injecting US$1 billion through borrowings that resulted in a 40% stake holding, while 60% was held by PSI.
The latter, however, injected only US$108 million and several assets for the 60% interest. The 1MDB-PSI JV was established for oil and gas exploration. In 2010, 1MDB converted its investment in the JV to “murabahah” notes due to certain accounting circumstances with an additional US$1.5 billion injection.
However, the murabahah notes were converted back to equity investment in 2012 to enable the repatriation of the fund.
1MDB wanted to retrieve the fund to invest in local projects, namely the Tun Razak Exchange and Bandar Malaysia.