KUALA LUMPUR, Jan 5 — Former prime minister Datuk Seri Najib Razak should have known that high-level talks between governments should be carried out through proper diplomatic methods, instead of through informal chats during his family's holiday vacation on a yacht, an investigator told the High Court today.

Malaysian Anti-Corruption Commission (MACC) investigating officer Senior Superintendent Nur Aida Arifin said this while testifying as the 49th prosecution witness in Najib's trial over the misappropriation of RM2.2 billion of 1Malaysia Development Berhad (1MDB) funds.

Her testimony today was about actions that Najib took in relation to a purported joint venture between 1MDB and PetroSaudi International (PSI) Limited, which eventually resulted in 1MDB losing billions of ringgit to the purported "investment” which had zero returns.

Nur Aida was referring to events in 2009, when Najib and his family were on holiday in France, and when Najib and now-fugitive Low Taek Jho later met with an individual known as Prince Turki bin Abdulaziz Al-Saud and Tarek Obaid as PSI representatives on a yacht during the family vacation. Prince Turki was previously said to be the Saudi ruler's son.

"Datuk Seri Najib's family holiday meeting which later changed into discussions of diplomatic joint ventures did not go through legitimate and formal discussion channels to the extent it caused huge losses to the country,” she said in the 1MDB trial, referring to the purported government-to-government (G2G) discussions that took place.

Najib's lead lawyer Tan Sri Muhammad Shafee Abdullah said the defence is "objecting to all that”, calling this part of Nur Aida's testimony as an "opinion”.

Nur Aida then continued her testimony.

"That discussion also did not involve senior government officials, when the government is forced to bear the borrowing of funds with full government guarantee on that borrowing.

"Datuk Seri Najib as the prime minister should have known that G-to-G joint venture discussions at the highest levels like this require legitimate diplomatic channels and not originating from informal discussions on a yacht only,” she said.

Addressing the court, Shafee appeared to scoff at the prosecution witness’ testimony, saying that Nur Aida was testifying as if she had been in diplomatic service for a long time.

Deputy public prosecutor Ahmad Akram Gharib asked the court to take note of the objection and to deal with it at a later stage of the trial during submissions.

He said the prosecution would not be amending this portion of Nur Aida's testimony.

Last Tuesday, Nur Aida testified that Najib and his family members were in mid-2009 invited by a Kuwaiti prince and an individual named Sheikh Hammad to holiday on their yacht named RM Elegance that was in the waters of southern France, and that Low and Najib's special officer Datuk Wan Ahmad Shihab Wan Ismail had arranged this vacation.

Nur Aida had previously also testified that Najib and his family were on the third day of sailing invited by Prince Turki and Tarek Obaid for tea on their yacht that was also sailing in the same waters, and that it was during the meeting on this yacht also attended by Low that discussions were held on a proposed business joint venture between Saudi Arabia and the Malaysian government.

Nur Aida had also testified that Prince Turki on August 28, 2009 sent a letter to Najib, which also came with a letter from PSI CEO Tarek Obaid to Najib which stated an intention for a joint venture following their meeting on the yacht.

In Tarek's letter, PSI wanted to have a joint venture by contributing US$1.5 billion of assets for a 60 per cent stake and with 1MDB to contribute US$1 billion cash for a 40 per cent stake, and with a deadline of September 28, 2009 given for the signing of the 1MDB-PSI joint venture agreement, she had said.

Previously, 1MDB's former CEO Datuk Shahrol Azral Ibrahim Halmi had testified that the joint venture deal was signed on September 28, 2009, and that 1MDB used US$1 billion — which 1MDB's predecessor Terengganu Investment Authority (TIA) previously raised by issuing a RM5 billion bond — for the joint venture.

Back then, Shahrol Azral said that 1MDB had received "nothing” and not even "a penny” back from this purported US$1 billion "investment” in the 1MDB-PSI joint venture, and that US$700 million of this amount had been sent to Good Star Limited (now known to be now-fugitive Low Taek Jho's company).

In her testimony today, Nur Aida said PSI's appointment of Edward L. Morse as the valuer of PSI's assets for the joint venture was "dubious” as his valuation report was prepared in only eight days, when the assets' alleged value was very big at around US$2.7 billion to US$4.5 billion.

Testifying about her investigation findings on Najib's role in the 1MDB-PSI joint venture, Nur Aida said the ex-PM had told Shahrol Azral that there was no need to make a fresh valuation on PSI assets with the reason of wanting to ensure good bilateral ties between Malaysia and Saudi Arabia in terms of politics and reputation.

At this point, Shafee raised another objection, claiming that Nur Aida was relying on hearsay.

Nur Aida previously testified that the 1MDB board wanted 1MDB to appoint its own valuer for PSI assets instead of relying on the PSI-appointed valuer Morse's valuation, and that a minutes of a meeting between Najib and Shahrol Azral on October 16, 2009 — and which was pre-prepared by Low and later signed by Najib — showed that Najib had decided not to carry out revaluation to take care of the Malaysia-Saudi bilateral ties.

Nur Aida today also testified her investigation had found that Najib had allegedly "used” Low and Shahrol Azral to force the 1MDB board of directors via its then chairman Tan Sri Mohd Bakke Salleh to follow their orders and recommendations in several matters in the 1MDB-PSI joint venture.

"The reason that is always given is to take care of the G to G relations between the Malaysian government and Saudi Arabian government. Based on this reason, many decisions and approvals which do not favour 1MDB and the Malaysian government were made,” she said, with Shafee then again objecting to her testimony of Najib's alleged use of the two individuals to make the 1MDB board carry out unfavourable decisions.

Among other things, Nur Aida said 1MDB ended up giving a total of US$1.83 billion for the purported joint venture with PSI that was later converted into an arrangement to loan money to PSI, saying that only US$800 million of the funds were sent to the joint venture firm and that the US$1.03 billion was sent to Low's Good Star which had no business ties with 1MDB.

She testified that Good Star had passed millions of ringgit to a Riyadh Bank account belong to HRH Prince Faisal Bin Turki Al-Saud and HRH Prince Saud Bin Abdulaziz Al-Saud, and that this Riyadh Bank account had on two occasions in February 2011 and June 2011 sent funds totalling US$10 million each (both equivalent to more than RM30 million each) to Najib's AmPrivate Banking-MR account.

"As a whole, between February 23, 2011 and June 14, 2011, there was money totalling RM60,629,839.43 from an account in Riyadh Bank, Saudi Arabia entering into Datuk Seri Najib's AmPrivate Banking-MR account (account number 211-202-200969-4) where the source of the deposited money is from the IMTN (Islamic) bond issuance and syndicated term loan made by 1MDB,” she said of her investigation findings.

While Shafee raised an objection to her "conclusion” on the RM60 million which entered Najib's account, Nur Aida said she would not be dropping the part of her testimony where she cited the RM60 million's origin to be 1MDB funds as she said this is from her investigation.

The source of 1MDB-linked funds which Nur Aida was referring to was a RM5 billion Islamic bond issued by 1MDB predecessor TIA and a RM2.5 billion syndicated term loan that 1MDB had taken in order to give out a loan to PSI.

Citing her investigation findings, Nur Aida today listed a number of official conduct by Najib, including his obtaining of the Cabinet's agreement for the Malaysian government to provide a government guarantee in 2009 for TIA to take on the debt of up to RM5 billion with the Islamic bond issuance, and Najib's decision for the federal government to take over TIA and which led to TIA's name change to 1MDB.

Nur Aida also said her investigations showed Najib had ordered the 1MDB board of directors to approve a resolution to allow 1MDB to enter into a joint venture with PSI by investing US$1 billion into the joint venture, with Shafee then raising his objection to this point.

Najb's 1MDB trial before trial judge Datuk Collin Lawrence Sequerah resumes next Monday, with Nur Aida expected to continue testifying.

* Datuk Seri Najib Razak’s lawyer Tan Sri Muhammad Shafee Abdullah had on January 8, 2024 requested for Nur Aida’s testimony relating to comments on the yacht meeting to be expunged or removed from the court’s records. After hearing arguments from both sides, trial judge Datuk Collin Lawrence Sequerah then ordered Nur Aida’s testimony regarding comments on the yacht meeting to be expunged, except for the fact that such a meeting had taken place between Prince Turki, Tarek Obaid, Low Taek Jho and Najib.