DEBUNKED

Najib’s 1MDB Trial: Day 26

October 29, 2019

1650

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Former 1MDB CEO Shahrol was described in the DoJ report as 1MDB Offical Number 2, while former 1MDB executive director Casey Tang was 1MDB Official Number 1.

9.32am: Accused Najib Abdul Razak enters the court and takes a seat at the front row of the public gallery to await the beginning of proceedings.

Also seen in court is his lead defence counsel Muhammad Shafee Abdullah and other members of the defence team, lead DPP Gopal Sri Ram and other DPPs.

Former 1MDB CEO Shahrol Azral Ibrahim Halmi is seen seated at the witness stand.

9.45am: Najib enters the dock as proceedings begin.

9.54am: Shafee begins his cross-examination of Shahrol.

9.57am: Shafee is going through the loan agreement from 1MDB to PetroSaudi International (PSI) to the tune of US$700 million. Shahrol agrees that Tarek Obaid was one of the signatories on the agreement.

10.21am: Shahrol says he was satisfied that Casey Tang and Jho Low had contravened a board decision to split the PSI funds of US$1 billion to US$700 million and US$300 million.

Shahrol says he felt that this should have been done. Tang then informed him to do it first and tell the board later. Shahrol says there was a need to get it done because he was rushed.

Shafee: How long would it take to call the board?

Shahrol: Not long, but Casey told me we will explain to the board later.

Shafee: The board’s consent was not obtained before the split?

Shahrol: Yes.

Shafee: What was the difficulty in asking the board (for permission)?

Shahrol: Time constraint and the need to get things done.

The court had previously heard that US$700 million of the money was diverted to Jho Low’s company, Good Star Limited.

10.48am: Court takes a short break.

11.30am: Court resumes. Shahrol is verifying the account that the US$700 million was transferred to.

Shafee suggests to Shahrol that, in retrospect, Low was a “total liar” and his credibility is in question. Shahrol agrees.

12pm: During cross-examination by the defence, Shahrol claims at the time the money was transferred in 2009, he did not know that Good Star was owned by Low.

He says that the money was transferred into RBS Coutts Bank account number 11116073 (Good Star account) because PetroSaudi represented to 1MDB that the account belonged to PetroSaudi’s affiliate.

According to Shahrol, it was one of PSI’s executives, either Patrick Mahoney or Tarek Obaid, who made the representation.

Shahrol claims that he only knew about Jho Low was the owner of Good Star when he read about the matter on media reports years later.

Shahrol says the deal was a sham as he had not heard of Good Star before.

12.04pm: Shahrol tells the court that he only “scanned through” report on 1MDB by the US Department of Justice.

He claims that the report had turned him off when DoJ accused him of being complicit in the US$700 million transfer of 1MDB funds into Jho Low’s Good Star in 2009.

Shahrol claims that the DoJ also did not have the complete information, and nobody from the department had come to ask him.

During the cross-examination by Shafee, the court also hears from Shahrol that he was described in the DoJ report as 1MDB Offical Number 2.

He says former 1MDB executive director Casey Tang, meanwhile, was 1MDB Official Number 1 in the report.

12.20pm: Shahrol admits to the possibility that Najib could have been misled by Jho Low.

Shafee: You surely agree with me that Najib had nothing to do with this sham agreement?

Shahrol: I can’t say what he knew.

Shafee: You agree with me that if you were duped, he (Low) may have duped najib?

Shahrol: Yes, I agree.

Shafee: You agree with me that if the clock strikes 13, you have to check the clock? That Casey, Low and others were untruthful?

Shahrol: It’s hard to say if they were entirely untruthful.

Shafee: If you could go back in time, would you trust them?

Shahrol: If I could go back in time, I would have quit the job.

Shahrol also tells Shafee he believed that Najib wanted to do good with 1MDB and that’s why he served Najib.

12.37pm: 1MDB and Jho Low’s company Good Star Ltd had purportedly entered into a loan agreement in Jan 2010, the court hears.

A document tendered as evidence in the trial showed that then 1MDB executive director Casey Tang had signed the paper where 1MDB purportedly agreed to loan Good Star US$700 million.

However, this is established in court as being a fraudulent document as Shahrol testifies that they had never had any dealings with Good Star.

“It’s a fraud. We never entered any transactions with Good Star,” Shahrol says.

Shahrol says the signing of the document by Casey Tang was also done without his knowledge as the then CEO, and the knowledge of 1MDB’s board of directors.

Under cross-examination by the defence, Shahrol says that if he were to guess, the purported loan agreement could have been a fraudulent attempt by Jho Low and his associates to convince banks that Good Star had acquired the money legally.

12.54pm: Court adjourns for lunch break.

2.48pm: Proceedings resume.

2.50pm: The board members of 1MDB had expressed a lack of confidence in the valuation of assets tied to its joint venture with PSI, Shahrol testifies.

Shahrol agrees with the assertion of Shafee, who is referring to the Oct 3, 2009, 1MDB board meeting minutes.

The meeting took place after the signing of the 1MDB-PetroSaudi joint venture agreement in September that year.

3.10pm: Shahrol testifies that in Oct 2009, Najib advised 1MDB’s board of directors that there was no need for them to seek a second valuation of PetroSaudi Holdings (Cayman) Ltd assets in Turkmenistan and Argentina.

Najib was the chairperson of 1MDB board of advisers then.

Shahrol said he had gone to meet Najib on Oct 16, 2009, to seek his advice on behalf of the board of directors.

This followed concerns by members of the boards over the value of PetroSaudi (Cayman) assets, valued by valuer Edward Morse, was not as much as claimed.

The assets, valued at US$2.2 billion, were what PetroSaudi (Cayman) had purportedly injected in its joint venture vehicle with 1MDB.

Under cross-examination by Shafee, Shahrol agrees that Najib had not used words that prevented 1MDB from going forward with their plan to seek second valuation.

He agrees to the suggestion by Shafee that Najib was only giving his advice.

However, Shahrol testifies that at that point in time, he believed that Najib did not want them to do the second valuation.

Shafee: […] I put it to you, the chairperson of board of advisers (Najib) had never told you not to take second valuation. He only expressed his opinion

Shahrol: I disagree, that’s not what I thought.

3.18pm: Shahrol testifies that he owed Najib a fiduciary duty tied to 1MDB.

This causes Shafee to demand whether Shahrol has documentary proof of this, to which Shahrol admits he does not have.

Shafee: You agree as senior management member (of 1MDB), you have a fiduciary duty to the company (1MDB)?

Shahrol: Yes.

Shafee: You do not owe a fiduciary duty to Najib as then 1MDB board of advisor chairperson and prime minister?

Shahrol: That was not what happened.

Shafee: I do not care what happened. I ask you if you have a fiduciary duty to the prime minister (Najib)?

Shahrol: I do.

Shafee: Show me the authority (documentary evidence)?

Shahrol: I do not have any. (I refer to) the (1MDB) Articles of Association, the appointment to senior management (as CEO), that was done by the prime minister.

3.40pm: The court hears that in 2009, 1MDB’s legal representative Brian Chia was misled to believe that a valuer firm appointed by PetroSaudi Holdings (Cayman) Ltd was an independent valuer.

Shahrol says this during cross-examination by the defence over a memorandum that was prepared by Chia, which stated that Edward Morse was an independent entity in the valuation process.

Shahrol also agrees to a suggestion by Shafee that the memorandum showed that Chia had no fundamental knowledge on the matter.

When Shafee asks Shahrol who had presented such information to the lawyer, Shahrol says that he believed that it could be Casey Tang.

Shafee: So, in short, this nice memo by Brian Chia was made without having fundamental knowledge about the assets of PSI. And secondly, he doesn’t have the fundamental knowledge that the US$700 million had gone to Good Star

Shahrol: Yes.

4.05pm: PSI was not happy with 1MDB’s plan to seek an independent valuation on assets that it had purportedly injected into their joint-venture company, testifies Shahrol.

The witness says PSI had stated it was not happy with “the level of trust” in the joint venture.

Shahrol says that while he did not suspect anything then, he now believes that the suspicion raised by 1MDB board of directors on PSI assets value was a justified concern.

4.10pm: Shahrol says the board did not trust PSI and asked for a second evaluation but was discouraged from doing so by PSI because they claimed that it would cost a lot of money.

Shahrol says he realised in hindsight that PSI did not want the second valuation because it would have uncovered the truth about their assets.

4.22pm: Shafee says Edward Morse, who conducted the first and only valuation, was in cahoots with PSI to give 1MDB a fictitious report.

Shafee: I would like to question Edward Morse if he’s here one day.

4.21pm: Jho Low is likened to a fox taking care of a chicken, according to Shafee.

Najib’s lawyer makes this comparison when Shahrol testifies that he went back and forth between Najib, Jho Low, and 1MDB’s board of directors.

Shahrol testifies that after a meeting with Najib as the 1MDB board of advisor chairperson on Oct 16, 2009, he went to meet Jho Low, then obtained the purported minutes of Shahrol-Najib meeting and went back to the 1MDB board of directors.

On hearing this, Shafee exclaims that it is akin to asking a fox to take care of a chicken.

Shafee: Am I wrong that Jho Low was the fox taking care of the chicken?

Shahrol: I saw him (Jho Low) as a facilitator for Najib. Now, it seems that he (Jho Low) was in a way facilitating the misappropriation from 1MDB.

I think it is worth knowing that in 2010, Good Star Limited (allegedly owned by Jho Low) sent money to Red Granite (a film company linked to Najib’s stepson Riza Aziz).

Shafee: Why did you go to Red Granite? Concentrate on what you did or did not (answer to specific questions during cross-examination).

4.40pm: Najib’s RM2.28 billion 1MDB trial will start later at 11am tomorrow rather than the customary 9.30am.

Shafee informs the High Court that he has a matter at the Federal Court that he needs to attend to first tomorrow morning before he could come to the Kuala Lumpur Courts Complex.

Judge Collin Lawrence Sequerah allows Shafee’s application for proceedings to begin at 11am tomorrow.

The judge also adjourns proceedings for today.

Earlier reports:

Oct 24, Najib’s 1MDB Trial: Day 25

Oct 24, Najib Asks Prosecution to Hand Over Justo’s Information Given to MACC

Oct 21, Najib’s 1MDB Trial: Day 24

Oct 17, Najib’s 1MDB Trial: Day 23

Oct 17, Jho Low Changed 1MDB Constitution to Give Najib Absolute Power

Oct 16, Najib’s 1MDB Trial: Day 22

Oct 14, Najib’s 1MDB Trial: Day 21

Oct 10, Najib’s 1MDB Trial: Day 20

Oct 9, Najib’s 1MDB Trial: Day 19