Fake Aabar used real Aabar’s address in agreement with 1MDB.
9.30am: Accused Najib Razak enters the court and takes a seat at the front row of the public gallery to wait for proceedings to begin.
9.45am: Najib enters the dock as proceedings begin.
Former 1MDB CEO Shahrol Azral Ibrahim Halmi takes the witness stand to resume examination-in-chief by lead DPP Gopal Sri Ram.
9.55am: The court hears from Shahrol that after the company received government guarantee in May 2009, it could no longer engage any more loan agreements without the approval from the finance minister.
He says this when testifying that then finance minister Najib had in 2012 issued a letter approving an RM6.17 billion bridging loan and US$1.75 billion 10-year notes connected to 1MDB’s takeover of Tanjong Energy Holdings Sdn Bhd.
Shahrol testifies that without the letter, 1MDB could not have gone forward with the notes.
10.06am: Shahrol testifies that he was not informed why Falcon Bank was chosen by 1MDB’s Jasmine Loo and Terence Geh to open an account for the sovereign wealth fund’s related company, 1MDB Energy Limited.
“I was not informed by Jasmine Loo as well as Terence Geh why Falcon Bank was chosen as the bank for 1MDB Energy Limited.
“As far as I remember, at that time I had no knowledge at all that Falcon Bank had something to do with Aabar and Abu Dhabi.
“It was only in 2015 that I knew that Aabar, through Mohamed Badawy Al-Husseiny, was among the directors of Falcon Bank,” he testifies.
Shahrol says he signed as the account holder for 1MDB Energy Limited on May 16, 2012.
10.08am: Jho Low pressured for 1MDB’s speedy acquisition of Tanjong Energy Holdings Sdn Bhd in order to quickly “seal the deal” in the high-level negotiation between the Prime Minister’s Office (PMO) and Abu Dhabi’s crown prince, the court hears.
During examination-in-chief by Sri Ram, Shahrol says that the matter involved ‘G to G’ (government to government) implication, so the timetable and deadline were driven by external factors which included pressure from Jho Low.
“In this particular case, because of high-level negotiation between the Prime Minister’s Office and the crown prince of Abu Dhabi, to obtain the guarantee (linked to the acquisition), we needed to move fast to seal the deal.
“‘Seal the deal’ was a quote from Jho (Low),” Shahrol says.
10.16am: Documents for the witness are being verified. Shahrol goes through documents on 1Malaysia Development Bhd’s takeover of Tanjong Energy Holdings Sdn Bhd.
10.21am: Shahrol says he has not seen Jasmine Loo since he left 1MDB in 2013. He says the last time he saw Terence Geh was in 2014 or 2015.
10.25am: The court hears from Shahrol that 1MDB entered into a loan facility agreement worth RM6.17 billion with two banks in May 2012 to acquire Tanjong Energy Holdings Sdn Bhd.
Shahrol testifies that the agreement was signed by 1MDB subsidiary 1MDB Energy Sdn Bhd with Maybank Investment Bhd and RHB Investment Bank Bhd on May 17, 2012.
According to him, the loan was for the 100 per cent acquisition of Tanjong Energy’s equities.
10.32am: Shahrol says he cannot remember if 1MDB profited from the purchase of Tanjong Energy. He says profits should have come once Tanjong Energy was publicly listed, but this never materialised.
10.40am: Shahrol has no idea what happened to the US$577 million that 1MDB paid to Aabar Investments PJS Limited (BVI) as a security deposit for Aabar’s holding company International Petroleum Investment Company (IPIC) to issue a guarantee for bonds to be issued.
Shahrol: There was a security deposit that 1MDB needed to pay amounting to US$577 million.
Sri Ram: Was that amount paid?
Sri Ram: To which account?
Shahrol: It was an account belonging to Aabar BVI.
Sri Ram: Did you know what happened to the money?
Shahrol: I do not know.
10.45am: The court hears from Shahrol that 1MDB through its subsidiary 1MDB Energy Ltd had entered an ‘Option Agreement’ with Aabar Investments PJS Ltd on May 18, 2012.
Shahrol testifies that he did not have any experience in such financial structure before, and had to rely fully on Goldman Sachs and other board members to give their take on the matter.
He says that the other factor why they signed the agreement was because, with the call option, 1MDB would lock-in Aabar as an investor from Abu Dhabi.
This, Shahrol adds, would fulfil 1MDB’s goal of bringing in foreign investments in the energy sector.
However, according to Shahrol, he did not realise that the address of Aabar referred to in the agreement was in the British Virgin Islands.
For the record, the real Aabar is a company based in Abu Dhabi.
10.49am: The fake Aabar company had used the real Abu Dhabi-based Aabar’s address when it entered into a ‘Collaboration Agreement for Credit Enhancement’ with 1MDB in 2012, Shahrol testifies in court.
Then Shahrol says that he was confident of signing the agreement on May 12, 2012, as there was not much difference in the company’s name, and it had used the real Aabar’s address at 187 Floor, Ministry of Energy Building, Corniche Road, PO Box 107888, Abu Dhabi, United Arab Emirates.
“I had been to this address to deal with IPIC and the real Aabar. So, it was using the legitimate address of IPIC and real Aabar, while the short form used in this agreement was ‘Aabar Investments’.
“Thus, I did not notice at all that it was a different company which was Aabar Investments PJS Ltd (British Virgin Islands).”
Shahrol testifies that he only realised that there was a difference between the real Aabar and fake Aabar, where the latter had the word ‘Limited’, when news broke out about the 1MDB scandal.
10.50am: If matters were not rushed, questions would have arisen on the suspicious aspects of Aabar Investment PJS Limited, the court hears.
Shahrol says this about the whole expedited process of the collaboration agreement for credit enhancement between 1MDB Energy Limited and Aabar Investment PJS Limited dated May 21, 2012.
“The element of speed had always been there when we move at speed. We have entrusted each of the working parties to do their bit and to do so in the best interest of the country and company.
“Had they been given more time, there would probably have been questions raised on the peculiar aspect of the company [Aabar Investment PJS Limited (BVI)],” Shahrol says.
11.05am: The court is shown a series of photographs by Sri Ram, who then asks Shahrol if he knows the people in them.
Shahrol then identifies those in the photographs as Najib, Jho Low, and one Husseiny (Mohammed Badawy al-Husseiny) whom the witness identified earlier as related to Aabar.
It includes a photograph where Husseiny was hugging Najib.
Sri Ram then asks Shahrol to circle the men he identified with a red pen, and mark them as A, B and C, respectively.
11.15am: Court takes a recess.
11.45am: The hearing resumes after a short break with Sri Ram showing a photograph to Shahrol.
The witness then identifies those in the photo as Najib, Tarek Obaid, Najib’s wife Rosmah Mansor, and their children Norashman and Nooryana Najwa.
11.55am: Jho Low arranged 1MDB’s payment of US$577 million security deposit to alleged Aabar Investment PJS Limited in order to misappropriate it, Shahrol testifies.
The witness tells the court that investigation showed that the security deposit was arranged by Low to be funnelled into an account controlled by him.
Shahrol stresses that he did not know the money was meant to be misappropriated by going to Aabar, and that the payment by 1MDB was made in good faith based on documentation prepared by 1MDB’s Jasmine Loo and Terence Geh as well as Goldman Sachs’ Tim Leissner.
“I would not have approved the remittance if I had known that it would be misappropriated.
“After an investigation was done then I found out that the security deposit was arranged by Jho Low to enable 1MDB money to go into an account controlled by him for the purpose of misappropriation,” Shahrol says.
11.56am: Shahrol details 1MDB’s acquisition of Genting Sanyen Sdn Bhd with 100% equity from Mastika Lagenda Sdn Bhd. He says the project, named ‘Greyhound’, was led by Leissner and Loo.
Project Greyhound had the same modus operandi as the Tanjong Energy deal, whereby Goldman Sachs would broker the deal, he says.
12.02pm: Shahrol says they were to buy the independent power producer for RM2.75 billion, adding that he was to have full power to sign documents on the deal.
He says he was also in charge of ‘fundraising’ for the deal, by obtaining a RM1 billion loan and distributing bonds worth US$1.75 billion (RM7.3 billion) through 1MDB Energy (Langat) Ltd.
All this had to be run by ‘shareholder’ Najib, who was prime minister and finance minister, he says.
12.05pm: According to Shahrol, he believes that Low was mandated by Najib to orchestrate all of the company’s bonds issuance and IPIC guarantee.
Shahrol testifies that his belief originated from his observation of Najib’s actions, which Shahrol claims had tallied with talking points that had been prepared by Low.
Sri Ram: You said you believed that Low was mandated by Najib. What are the reasons you had that belief?
Shahrol: Because at this point in time, I had observed the actions and talking points that originated from Low were fulfilled by the actions of Najib.
Sri Ram: So, in other words, the action taken by the accused corresponds with talking points sent to you by Low.
Shahrol: Actions tallied perfectly.
12.30pm: The court hears that 1MDB board of directors had in Oct 2012 approved the company to borrow RM800 million from Affin Investment Bank for the purpose of taking over Mastika Lagenda.
Then Shahrol testifies that the approval was made by the board through a director’s circular dated Oct 9, 2012.
He says the board had also given him the power to manage the agreement matters and to sign the agreement on behalf of the company as its CEO and managing director.
12.50pm: Sri Ram summarises that Genting Sanyen was bought with US$1.75 billion worth of bonds and RM800 million from Affin Bank, the deal’s lead arranger.
12.55pm: Court breaks for lunch.
2.37pm: The hearing resumes with Shahrol continuing his testimony.
2.45pm: The court hears that 1MDB Energy Ltd’s account with Falcon Bank in Hong Kong received US$1.64 billion on Oct 19, 2012, as part of its US$1.75 billion bonds issued for the purpose of taking over Genting’s power assets.
Shahrol testifies that on the same day, 1MDB Energy had withdrawn transactions of US$692 million to pay to Genting Power Holdings, and US$790 million as payment to Aabar Investments PJS Limited.
“I admit there is a huge surplus from the financing for the acquisition. However, I would like to reiterate that I did not know that the extra money for security deposit payments amounting to US$790,354,855.00 to Aabar was to be swindled by other parties.”
2.52pm: Shahrol says after the investigation into 1MDB was done, he then realised that the deposit money was arranged by Low to go into his accounts and subsequently Najib’s accounts.
There was not a single instance where Low’s instructions to Shahrol were countermanded or contradicted by Najib, the court hears.
Sri Ram: You said that Low told you the accused knew about this?
Sri Ram: Did you verify with the accused?
Shahrol: No. I felt that it would be improper as, since 2009, all directions and instructions with respect to 1MDB matters that were conveyed to me by Low from Najib have proven to be consistent with the subsequent action and approval from Najib. Moreover, there was not a single instance in which these directions from Low (to Shahrol) were countermanded or contradicted by Najib.
A bit later when reading out his Witness Statement, Shahrol says he believed that all directions by Low were from Najib himself and that the then prime minister knew everything that was done by Low.
3pm: The court hears that Low had proposed Goldman Sachs to be the financial adviser for 1MDB and its group of companies in 2012.
Shahrol testifies that the suggestion was made by Low in early 2012.
In his testimony, the witness says he had informed 1MDB board of directors during its special meeting on June 21, 2012, that Goldman Sachs had been selected to be the group’s adviser due to its in-depth understanding of 1MDB’s capital structure.
3.10pm: Jasmine Loo was working closely with Low in carrying out the mandate in accordance with the wishes of Najib, the court hears.
Shahrol testifies that Loo had been working at 1MDB for at least a year, and the direction to issue a mandate to deal with various transactions came from Low.
“In my mind, at the time, this just confirmed my trust that Jasmine (Loo) would execute according to the wishes that would be Najib’s (and conveyed by Jho Low),” Shahrol says.
3.19pm: The court goes through phase three of 1MDB transactions. This involves dealings over the Tun Razak Exchange real estate development in Kuala Lumpur.
3.31pm: Shahrol says on October 15, 2012, the 1MDB board met to go over a proposed collaboration with Aabar for the development of TRX. The terms of the collaboration are as follows:
1) Aabar will provide funding and expertise for the development of the TRX
2) The TRX land, valued at RM1.78 billion, will be transferred to TRX Co, which will be 100% owned by 1MDB
3) The joint venture will be unincorporated
4) No interest will be paid on either the land or the cash contribution
5) TRX Co will enter into a musyarakah agreement with Aabar
6) The profit will be split 50:50 between the parties but with no profit guarantee
7) Aabar will be entitled to appoint two out of five Directors in TRX Co
8) Aabar will be entitled to nominate the CEO of TRX Co
3.34pm: Court goes through the JV agreement between Aabar and TRX Co.
3.40pm: Shahrol tells the court that in 2012, IPIC had purportedly made a proposal for a joint venture between Aabar and 1MDB to work on the TRX.
According to Shahrol, IPIC had suggested for larger cooperation between Aabar and 1MDB which would involve consolidation of real estate assets between Aabar and the TRX.
This would purportedly help 1MDB to finance the development of TRX infrastructures.
Shahrol testifies that a letter by IPIC on this, dated Nov 6, 2012, was sent to 1MDB and later discussed in a 1MDB board meeting in Dec that year.
He says the then chairperson of 1MDB board of directors, Lodin Wok Kamaruddin, had tabled the letter in the board meeting.
Shahrol says everyone at the meeting believed that Najib was aware of the content of the letter from IPIC and he had given the go-ahead for the joint venture.
3.50pm: Shahrol tells the court that he saw that there were several similar characteristics between this TRX joint-venture proposed by IPIC with the one that 1MDB had entered with Petrosaudi in 2009.
Sri Ram: Did it in any way resemble the joint venture with PSI?
Shahrol: Yes. The 2009 JV proposal from PSI also included a joint venture company in which the joint venture partners were to inject assets and cash.
Sri Ram: Similar to this proposal?
Sri Ram: And the time committed to putting these transactions through, was it short, long, or medium?
Shahrol: It was very short. And one of the similarities, the letter IPIC Group (sent) to Najib, the one Lodin brought to the board, was sufficiently detailed up to the costs and book values, similar to the earlier one to be injected to PSI (in 2009).
However, Shahrol adds that the joint venture proposed by IPIC for Aabar and TRX did not materialise.
4pm: Shahrol claims that Low once told him Najib will ensure the Finance Ministry will issue a letter of support (LoS) in relation to the issuance of US$3 billion bonds from 1MDB Global Investment Ltd.
He says Low told him that “boss will bulldoze, don’t worry” – meaning that the LoS for the 1MDB-GIL bonds will be expedited – when questioned if there was sufficient time to obtain the letter.
The bond issuance followed the signing of a 50:50 joint venture agreement on March 12, 2013, between Aabar Investments PJS and 1MDB to form a US$6 billion strategic acquisition fund.
The US$3 billion raised from the bonds would represent 1MDB’s 50 per cent share.
4.12pm: Shahrol tells the court that Low operated in silos, keeping MoF, the PM’s department and also 1MDB apart. Many people were on a need-to-know basis so that they could not see the whole picture.
4.13pm: To Shahrol’s understanding, Najib knew everything Low was doing because their actions were in tandem with each other.
Sri Ram: Who put Jho Low in this position of power, from your observation?
Shahrol: From my observation, I didn’t know how embedded Jho Low was in Najib’s household. I first got an inkling in April 2009 when Jho Low brought me to Najib’s residence in Putrajaya.
4.24pm: “Low also informed me at the time that the Aabar joint venture will have a major impact on the 13th general election.
“I did not ask further about it. I merely concluded that the fundraising definitely has something to do with GE13,” he says.
Shahrol was referring to the 1MDB director circular resolution (DCR) passed on Feb 25, 2013, to form a joint venture with Aabar for global investments.
He says the planned US$6 billion joint venture involved 50:50 split between 1MDB and Aabar.
4.30pm: The court hears that Najib approved in 2013 for a joint venture between Aabar Investments and 1MDB for global investment activities.
Shahrol says that the approval was given by Najib through a ‘Special Rights Redeemable Preference Shareholder’s Resolution in Writing’ dated Feb 25, 2013.
According to Shahrol, Najib had given the approval in his capacity as the Minister of Finance Incorporated (MOF Inc) and as the special rights redeemable preference shareholder for 1MDB.
In his testimony, Shahrol says that the company’s board of directors through a directors’ circular resolution dated March 12, 2013, agreed to issue bonds worth US$3 billion through 1MDB Global Investments Ltd.
4.45pm: Shahrol ends his witness statement at page 242 for the day.
Kuala Lumpur High Court judge Collin Lawrence Sequerah adjourns the proceedings for the day. Proceedings will resume at 9.30am tomorrow.
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Sept 23, Najib’s 1MDB Trial: Day 11
Sept 19, Najib’s 1MDB Trial: Day 10
Sept 18, Najib’s 1MDB Trial: Day Nine
Sept 17, Najib’s 1MDB Trial: Day Eight
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Aug 28, Najib’s 1MDB Trial: Day One
Aug 28, Najib’s 1MDB Trial Begins