KUALA LUMPUR, March 21 — Datuk Seri Najib Razak’s lawyer should have directly quizzed former 1Malaysia Development Berhad (1MDB) CEO Datuk Shahrol Azral Ibrahim Halmi about what he had told a parliamentary watchdog, the prosecution in Najib’s trial said today.

Today was the hearing of Najib’s trial involving four power abuse charges and 21 money laundering charges in relation to the misappropriation of more than RM2 billion of 1MDB funds.

Najib’s lead defence lawyer Tan Sri Muhammad Shafee Abdullah was reading out excerpts of the bipartisan parliamentary watchdog Public Accounts Committee’s (PAC) 2016 report on its investigation of 1MDB’s governance.

Reading excerpts that involve what Shahrol Azral told the PAC or the PAC’s opinion of him, Shafee was using them to cross-examine former 1MDB director Tan Sri Ismee Ismail who is the 13th prosecution witness in Najib’s 1MDB trial.

Shahrol was both the former CEO of 1MDB and its predecessor Terengganu Investment Authority (TIA), and had completed his testimony as the ninth prosecution witness in Najib’s 1MDB trial over a course of around 40 days from September 23, 2019 to September 3, 2020.

At one point, lead prosecutor Datuk Seri Gopal Sri Ram sternly objected against Shafee’s line of questioning, saying that Shafee should have asked Shahrol directly instead.

"He should cross-examine Shahrol on what Shahrol told the PAC. How can he cross-examine this witness on what Shahrol told the PAC?” Sri Ram asked.

High Court judge Datuk Collin Lawrence Sequerah then noted that he himself had already raised this matter last week when Ismee was being cross-examined by another of Najib’s lawyers, saying: "It should have been put to Shahrol. I think he has already been confronted in fact with the PAC report last week.”

Last week, Najib’s lawyer Datuk Hariharan Tara Singh too had tried to cast Shahrol as being the one who had done wrongdoing in terms of a RM5 billion bond issued by 1MDB’s predecessor Terengganu Investment Authority (TIA).

Former 1MDB CEO Datuk Shahrol Azral Ibrahim Halmi is pictured at the Kuala Lumpur Court Complex August 3, 2020. — Picture by Hari Anggara

Shafee then argued that he had already cross-examined Shahrol extensively on the PAC report, and claimed that he wanted to ask a witness that is more independent by asking Ismee whether the PAC’s findings on Shahrol was correct.

Sri Ram then continued to object by saying that it would not be worth anything if a witness was to say that Shahrol was not truthful, as it would be for the High Court to determine for itself if the evidence given by each witness to the court is the truth or not.

In objecting to the PAC report’s opinion on Shahrol’s statement being presented to Ismee for him to be cross-examined, Sri Ram said this was "completely inadmissible” evidence and suggested that Najib’s lawyers could instead present submissions or arguments at the end of the prosecution stage on why they feel the High Court should not believe Shahrol.

Shafee insisted on asking Ismee to reply based on his knowledge as a former TIA board member about the PAC report’s contents, arguing that he had already asked Shahrol previously about the PAC report’s findings.

Datuk Seri Gopal Sri Ram at the Kuala Lumpur Court Complex February 18, 2021. — Picture by Firdaus Latif

Sri Ram again fiercely objected by arguing that Najib’s lawyer was trying to bring in evidence that is inadmissible, saying: "Completely inadmissible because whatever PAC findings may be, it’s not binding on Your Lordship. If Shahrol has been cross-examined on it, that is the end of the matter. Whether Witness A believes Witness B is truthful or not is completely inadmissible.”

The judge indicated Shafee could ask questions to Ismee if what was sought was the latter’s independent opinion on whether he agreed to matters based on the PAC report, but also suggested Shafee shorten this questioning.

The excerpts that Shafee had read out revolve around how the Terengganu Sultan had asked for the then Terengganu state-owned firm TIA to suspend or not to proceed with issuing the RM5 billion bond and the board’s resolution for the bond suspension, and also why Shahrol had signed agreements shortly after that for the bond issuance in May 2009 to proceed. (TIA was later in September 2009 renamed as 1MDB and had also come under the Finance Ministry’s ownership.)

Later, Shafee sought to ask Ismee if he agreed with hindsight that the "real reason” why Shahrol could not pull back or suspend the RM5 billion bond "was because he had planned together with Jho Low and the bank for a handsome profit of more than 12 per cent”. TIA had received only about RM4.3 billion of the RM5 billion bond issued, as much of the bond was sold at a discount of over 12 per cent to two companies which then resold them for profit.

The judge however said he did not think Ismee would be in a position to answer such a question, noting: "You are asking whether he had knowledge of some surreptitious deal by Shahrol with whoever else to make profits, how would he know?”

Shafee then rephrased his question to ask if there was an eagerness by Shahrol to complete the deal as compared to the board’s instructions and which Ismee then agreed to.

Lawyer Tan Sri Muhammad Shafee Abdullah arrives at the Kuala Lumpur High Court March 21, 2022. — Picture by Shafwan Zaidon

Later, Shafee asked Ismee about the term "working in silo” that had been mentioned by Shahrol, former 1MDB CEO Mohd Hazem Abd Rahman and former 1MDB chief financial officer Azmi Tahir regarding the work culture in 1MDB.

Shafee: What do you understand when I just told you, these three individuals, working in silo, don’t know why they listened to Jho Low but they were instructed by Jho Low to work in silos.

Ismee: My understanding, maybe, you are only supposed to know what you are supposed to know, nothing more.

Ismee had noted that communication, free flow of information and transparency is important in a business environment. Jho Low refers to Low Taek Jho, who was seen by 1MDB senior management as Najib’s adviser for 1MDB affairs and is now a fugitive wanted in Malaysia.

Shafee described working in silo as working on a need-to-know basis and involving secrecy, while arguing that this cannot be allowed in companies especially in the government-owned 1MDB.

Remarking that secrecy breeds corruption in any institution and breeds fraudulent behaviour, Shafee went on to say: "Working in silo therefore is the breeding ground for a corporation to be corrupted, for a corporation to be full of fraudulent transactions, such as what has happened in 1MDB.”

Ismee then replied: "That explains why we failed.”

Asked if the 1MDB board was aware of the former CEOs and former CFO of 1MDB claiming to have been ordered to work in silo, Ismee said "now we know” as he confirmed that the 1MDB board was not aware then.

Ismee agreed with Shafee’s suggestion that Low could direct people to do things without each other knowing and that they would then not know the full impact of what they had done.

Shafee then gave another suggestion of "working in silo” being an "excuse” for 1MDB trial witnesses to avoid answering why they did not check documents and why millions of US dollars of 1MDB funds were sent to entities that had nothing to do with the company’s projects, but Ismee said "My personal view, you can’t use that as an excuse.”

Najib’s 1MDB trial is scheduled to resume tomorrow morning.