Bogus promissory notes worth millions of US dollars were issued for the 1MDB International Holdings Limited equity sale to Bridge Partners International Investment Limited.
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.
Also seen in court is lead DPP Gopal Sri Ram and other DPPs, as well as lead defence counsel Muhammad Shafee Abdullah and other members of the defence team.
9.35am: Najib enters the dock, and the proceedings begin.
9.42am: Court is in session with former 1MDB CEO Shahrol Azral Ibrahim Halmi taking the stand.
9.45am: The RM18 billion strategic partnership deal signed between 1MDB and IPIC subsidiary Aabar Investment PJS was Najib’s “baby”, the court hears.
Shahrol testifies this with regards to the deal signed during a ceremony covered by the media at the Prime Minister’s Office in Putrajaya on March 12, 2013.
The ninth witness says the deal was also signed by then 1MDB chairperson Lodin Wok Kamaruddin and Aabar chairperson Khadem Al Qubaisi.
He says the ceremony was held in the presence of Najib and Deputy Supreme Commander of the UAE Armed Forces General Sheikh Mohamed Zayed Al Nahyan.
“Najib’s presence at the ceremony as well as at the PMO ceremony showed that he clearly had an interest, and it was Najib’s baby. Najib’s actions were in line with Jho Low’s plans,” Shahrol tells Sri Ram during the examination-in-chief.
9.55am: Najib had never asked 1MDB management what had happened to all the monies disbursed to various parties, the court hears from Shahrol.
Shahrol testifies that Najib had never called for a board meeting after news about the company’s financial scandal broke out in 2014.
Sri Ram: After the 1MDB scandal broke, I believe in 2014, did the accused call you and ask you what happened to this money?
Sri Ram: I mean all the monies that 1MDB had disbursed to the various parties.
Shahrol: No, he never did.
Sri Ram: Did he call you and other board members for a meeting?
Sri Ram: As to ask the whereabouts of these monies?
10am: The court hears from Shahrol that all the company’s debts had to be carried ultimately by the Finance Ministry and the federal government due to the fact that it was wholly owned by the ministry.
Shahrol testifies that the company was in total debt of about RM30 billion then.
Sri Ram: You were with 1MDB from 2009 to 2013, when you left there was about RM30 billion (debt), who carried this exposure ultimately?
Shahrol: MoF, and the government of Malaysia due to the fact that 1MDB is wholly owned by the MoF.
According to the witness, these debts include RM5 billion bonds issued by the company that was guaranteed by the MoF, and subsequent bonds totalling US$3.5 billion jointly guaranteed by IPIC and MoF.
On the joint guarantees, Shahrol testifies that in the event of a default, 1MDB was supposed to pay first and in the event it cannot pay, bondholders can call on the IPIC guarantee.
According to his testimony, IPIC would claim the money to pay the bondholders from MoF, as the parent of 1MDB.
He testifies that IPIC had made such a claim before, and this had been raised during one of 1MDB board meetings either in 2015 or 2016, which Shahrol says he cannot remember the exact date.
10.04am: Shahrol is showed some written resolutions of the sole shareholder of 1MDB, which is Najib. The document is authorisation by Najib for 1MDB to raise US$3 billion which is also backed by a letter of support from Najib.
10.07am: The pattern of leakages from 1MDB from 2009 to 2013 was always via siphoning some of the funds borrowed for national projects, the court hears.
“I now realise the pattern of leakages from 1MDB from 2009 to 2013 has always been to borrow funds for projects that are ostensibly good for the nation and to siphon some of the borrowed funds.
“Throughout the years, the method used by the perpetrators has been refined and tightened up, in the sense that the talking points and mandated tight timelines for fundraising leave less and less room for discussion at the 1MDB management and BoD (Board of Directors) levels.
“For example, during the 2009 PSI (Petro Saudi International) Joint Venture, there were discussions at the BoD on the investment.
“Contrast this with the 2013 US$6 billion joint investment fund with IPIC (ADMIC or Abu Dhabi Malaysia Investment Company Limited) that was done solely via DCR (director’s circular resolution) and Shareholder Resolutions,” Shahrol says.
10.17am: Shahrol testifies that he was removed from 1MDB as he had expressed dissatisfaction over how rapid the fund’s transactions were done.
“I suspect that I was removed from 1MDB because, at that time, I frequently expressed disquiet with how fast its financial deals were done.
“However, I was still in the 1MDB board at that time, with the excuse given by Jho Low was to manage optics.
“After the brouhaha of the 1MDB issue in 2015 and 2016, the 1MDB Board of Directors unanimously offered to resign but we were ordered by Najib to stay on until the new directors were appointed in 2016,” Shahrol says.
10.27am: The witness is explaining about Brazen Sky Limited – a special purpose vehicle (SPV) company set up in transit to bring back investment funds from PetroSaudi Oil Services Limited (PSOSL) operations in Venezuela. The company was established on July 12, 2012, in the British Virgin Islands (BVI). All the papers and proposals for the establishment of this company were managed by Jasmine Loo and Terence Geh.
“He (Jho Low) did not tell me all the details because I gave him full trust as 1MDB general counsel. Later, Loo dealt with Azmi Tahir and Geh as directors of Brazen Sky. Brazen Sky Limited’s account management is also managed by these three individuals. The Brazen Sky Limited account was opened at the bank of BSI, Singapore.”
Shahrol: Around the end of July 2012, Jho Low informed me that the United States had imposed sanctions on Venezuela. Therefore, in order to avoid the negative perception of the US government over Malaysia due to the existing PSOSL equity ownership in the country, Jho Low and Jasmine Loo proposed that the PSOSL equity ownership of 1MDB International Holdings Limited be disposed of by selling 100% of 1MDB International Holdings Limited’s shares to Bridge Partners International Investment Limited.
10.31am: “At that time, Bridge Partners International Investment Limited was proposed by Terence Geh and Jasmine Loo, and I accepted their proposal in good faith, as this proposal was also consistent with the action plans sent by Jho Low via email to me. So, I accepted the proposal assuming all of these details have been approved by Datuk Seri Najib,” the witness says.
10.35am: Shahrol says Jho Low and Jasmine Loo also proposed that the proceeds of the PSOSL equity sale be invested in a hedge fund at the Bridge Global Absolute Return Fund SPC operating from the Cayman Islands.
“I was initially sceptical of the idea because the original goal was to bring back the money to Malaysia originally from investing in the JV with PetroSaudi during 2009. But when I was given action plans from Jho Low stating how this investment would be returned to Malaysia on a scheduled basis, as they had to wait for the best time to avoid losses, I agreed to bring the matter under the 1MDB board of directors agreement. Therefore, I brought this matter to the 1MDB BOD meeting for approval.”
10.36am: Shahrol says on August 2, 2012, the board of 1MDB issued a resolution approving the sale of 1MDB International Holdings Limited to Bridge Partners International Investment Limited. In addition, the board also agreed that the proceeds of the sale of the equity be invested in any investment managed by a licensed fund manager.
10.37am: Shahrol is asked by Sri Ram if he had any reason to doubt Jho Low. Shahrol says he had no reason to doubt Low’s instructions as Najib’s actions were also in tandem with Low’s instructions.
10.44am: Shahrol says bogus promissory notes worth millions of US dollars were issued for the 1MDB International Holdings Limited equity sale to Bridge Partners International Investment Limited. Shahrol says he found out these promissory notes were bogus when he was called in for questioning in the 1MDB case.
10.47am: Shahrol says he had no knowledge of these notes but knows that 1MDB did not receive any money for the sale.
10.50am: From 2012 to 2013, auditor KPMG questioned the actual value of international assets owned by 1MDB, the court hears.
Shahrol testifies that, however, KPMG was not able to confirm the value of the underlying assets of the investment by Bridge Global Absolute Return Fund SPC (Special Purpose Vehicle).
“This was caused by Bridge Global Absolute Return Fund SPC via BSI Bank giving the excuse of client asset confidentiality for not giving out the full information on the underlying asset,” Shahrol says.
11.21am: Shahrol says he was transferred to Pemandu in 2013 after four years as 1MDB CEO.
“I was under the impression that I was transferred because I had expressed dissatisfaction with the way things were run in terms of monetary transactions and the speed with which they were done.
Shahrol then wraps up his 270-page witness statement, and he then signs on the document.
The court goes for a short break after Shahrol wraps up his witness statement.
Sri Ram is expected to continue with several additional questions to the witness after this.
11.41am: After a short break, Shahrol is back on the stand.
11.45am: The court hears from Shahrol that Jho Low had given briefings to 1MDB board members before they were interviewed by MACC and the police in 2015 and 2016.
Shahrol testifies that Low had given them talking points on what they should tell the authorities when questioned about the company.
“The briefings underline two key themes. Number one is to minimise or to downplay Datuk Seri Najib and Jho Low’s involvement in the decision-making in SRC International and 1MDB.
“And number two is that all of this was a political attack against the Prime Minister,” Shahrol tells the court.
For the record, SRC International used to be a subsidiary of 1MDB before it became a company directly under the MoF Incorporated.
11.47am: Prior to the 2010 Public Accounts Committee (PAC) hearing, its member Abdul Rahman Dahlan discussed with Shahrol to downplay Najib’s role in the company, the court hears.
Shahrol says before the 2010 PAC hearing, Jho Low had also given him talking points on what to say.
“He (Jho Low) also arranged for me to meet with one of the BN PAC members before the actual hearing.
“I met with Rahman Dahlan, he was a (PAC) committee member at the time and we talked about the kind of questions PAC would ask me.
“The theme was to downplay Najib and Jho Low’s involvements in the decision-making (of 1MDB),” Shahrol says.
11.53am: Shahrol says that in 2015, there was a second PAC hearing. He says Arul Kanda told him to tell the PAC that he was overseas. He says Arul Kanda told him this was an instruction from the Prime Minister’s Office (PMO).
Shahrol: Arul said that the PMO wants us to hightail it out of the country before the meeting.
He says he went to Singapore to avoid the PAC meeting.
11.55am: The witness says he can’t remember if it was Arul Kanda or Jho Low who had instructed him to go to Farid Rizuan, who was in charge of Najib’s image branding.
11.56am: He says during the meeting at Farid’s house, PAC members were also there, including PAC chairman Hassan Ariffin.
11.57am: He says the meeting was planned to coach him on the questions that the PAC will ask.
“He (Hassan) told me (during post-PAC hearing) about the thoughts of the committee and what would go in the PAC report.
“The message was to strongly imply that this is a political attack against the prime minister (Najib) and to downplay any role Najib had in the decisions of 1MDB,” Shahrol says.
12.01pm: Shahrol says that at multiple meetings Najib’s house, Jho Low was positive and very comfortable with Najib.
Sri Ram: Did you meet the accused’s wife with Jho Low on any of these occasions?
Shahrol: Not that I can recall.
12.02pm: Shahrol says based on Jho Low’s familiarity with the layout of Najib’s home and the way he communicated with Shahrol about other family members, he believes that Low was close to Najib.
Sri Ram: Did you attend any function at which the accused and any family members attended?
Shahrol: I was not part of that circle. No.
12.10pm: The court hears from Shahrol that he earned RM80,000 a month when he first joined 1MDB precursor, the Terengganu Investment Authority (TIA), as its first CEO in 2009.
According to Shahrol, he then worked his way up and had salary increments every year. He earned a monthly salary of RM99,000 when he resigned from 1MDB in 2013.
Sri Ram, who is conducting the examination-in-chief on the witness, then asks Shahrol if the amount was before or after tax, to which Shahrol says it was before tax.
Besides his monthly salary, Shahrol says he also received RM179,000 a year as a 1MDB board member, while for each board meeting he attended, he would receive RM1,500.
Shahrol says that in 2011 or 2012, the prime minister had called on him to find out the status of CSR projects that 1MDB was conducting for Yayasan 1MDB.
He says he was excited and he had impolitely cut off Najib a couple of times as the former prime minister was asking questions, as Shahrol was very pleased and excited to be speaking to Najib.
“I was excited because he was the PM, you don’t get to speak to the PM.”
Shahrol says Jho Low called him a couple of days later to tell him that Najib was pleased with him. Shahrol says he got an 18-month bonus that year. He says that this was when his salary was still at RM80,000 a month.
12.12pm: Sri Ram ends his examination in chief.
12.13pm: Shafee says he has to delay the cross-examination to Monday as he has to sift through documents before he can ask his questions.
Shafee says he needs to ask a few preliminary questions before the trial adjourns.
12.14pm: Sequerah asks Shafee if it is possible to conduct the cross-examination tomorrow. Shafee says he has another case as well tomorrow.
Shafee informs the High Court that the defence needs at least two weeks to cross-examine Shahrol.
12.18pm: Sequerah adjourns the trial to Monday.
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