KUALA LUMPUR, Nov 7 – The 1Malaysia Development Berhad (1MDB) senior management was not negligent when it sent hundreds of millions in US dollars to Good Star Limited in 2009 and 2011 without investigating the latter’s real owner, 1MDB’s former CEO said today.
Datuk Shahrol Azral Ibrahim Halmi confirmed that 1MDB had transferred the funds more than once to Good Star Limited, adding that both he and 1MDB were not aware then that the company was being paid by fugitive financier Low Taek Jho.
Shahrol today maintained that 1MDB had believed that Good Star was a subsidiary of 1MDB’s purported business partner PetroSaudi International Limited (PSI), as that was what PSI had represented.
1MDB had transferred US$700 million (RM2.8 billion) in 2009 and a total of US$ 330 million in 2011 to Good Star, but Shahrol said 1MDB was merely following instructions from PSI.
Najib’s lawyer Tan Sri Muhammad Shafee Abdullah today quizzed Shahrol on the RBS Coutts bank account number 11116073.2000 that PSI had given to 1MDB for the US$330 million to be transferred to.
Shafee argued that 1MDB officials including Shahrol would have by 2011 knew that the account number actually belonged to Good Star instead of PSI, based on the previous 2009 experience where 1MDB was given a strikingly similar account number 11116073 that was identified to be Good Star’s account.
“No, at that time, I wasn’t paying much attention to that number. I can testify for myself at least, this time in 2011, we were just executing it on good faith... We weren’t in any investigative mode at that time,” Shahrol replied.
Shahrol said that 1MDB officials did not memorise or recognise Good Star’s account number from the previous 2009 transaction and had relied entirely on PSI’s information.
Shahrol said PSI had also insisted that 1MDB used only the account number 11116073.2000 in banking documents without mentioning the name Good Star as the beneficiary, noting that the banks involved had accepted this as the funds were transferred to the account.
Shahrol said he was not suspicious then at PSI’s insistence on hiding the name Good Star in banking documents for the fund transfers that eventually totalled US$330 million, adding that there was “no reason to be suspicious” of PSI back in 2011.
Shafee then highlighted the extra ‘2000’ in Good Star’s account number 11116073.2000 was merely in reference to the transactions being in USD, and suggested that Shahrol should have noticed that it was the same account.
Shahrol: No, if I was really paying attention and I was suspicious, I would know but as I stated earlier that at that time there was no reason to be suspicious, it was just an account number given to me and 1MDB from a trusted partner. We just executed.
Shafee: Now Datuk, you are sending a lot of money belonging to 1MDB, we are no longer in the bracket of millions but billions. Now not determining who is the account holder, who is in fact Good Star would at least be negligent.
Shahrol: I disagree.
Shafee: It is not even diligent on your part and your team.
Shahrol: I disagree.
Shafee explained to the judge that he wanted to show that Shahrol’s failure to be suspicious indicated that the latter was allegedly either having “willful blindness” or purportedly “acting in conspiracy with Jho Low and the others”.
Shahrol today reaffirmed however that he had not known while he was 1MDB CEO that Good Star belonged to Low, noting that he had only read in 2015 in news reports that Low was the actual owner of Good Star.
Shahrol said he had messaged Low for an explanation after the 2015 news report, noting that Low had insisted that Good Star was owned by PSI and that he would get PSI to write to Shahrol to confirm the claim.
Shahrol was referring to PSI CEO Tarek Obaid’s May 22, 2015 letter where the latter appeared to confirm the matter. At that time, Shahrol was no longer 1MDB CEO but still a director in 1MDB.
Shafee read out Obaid’s letter: “On behalf of PetroSaudi International Limited and the rest of the PSI Group, I confirm all wired transfers of 1MDB and affiliated company in 1MDB Group had been received by the PSI Group. In addition, I wish to confirm from September 1, 2009, Good Star’s sole share was held by PSI Group and this position remained unchanged during receipt of all funds sent from 1MDB Group to PSI Group.”
Shahrol confirmed that he had never thought about how Obaid’s letter was worded, with Shafee remarking that it was a “calculated limited answer to make it clinically correct yet morally wrong.”
1MDB’s lack of funds
As a company that borrowed money to fund its operations and to give out loans to PSI, 1MDB had decided on May 27, 2011, to only lend US$205 million to PSI instead of the US$330 million initially sought for.
Shahrol said the reduction was done as 1MDB’s chief financial officer Radhi Mohamad had alerted that the company would not have enough funds to be able to meet some of its financial requirements for local projects Bandar Malaysia and Kuala Lumpur International Financial District (now known as Tun Razak Exchange) if it were to send the full US$330 million.
But after informing Low who then asked him to write a letter to inform PSI, Shahrol said Low had later relayed that PSI was very disappointed and dissatisfied.
Shahrol said Low had claimed “they complained to daddy”, in allusion to PSI chairman Prince Turki allegedly having spoken to Saudi Arabia’s then ruler King Abdullah about the matter.
Shahrol had said he was made to understand by Low that there was allegedly a conversation between Najib and King Abdullah about the matter and that Shahrol, at last, gave in and ordered for the last remaining US$125 million to be paid out by 1MDB.
Quizzed by Shafee, Shahrol today confirmed that he did not confirm with Najib whether the purported conversation with King Abdullah actually took place, confirming that he had based his final decision for 1MDB to lend the full US$330 million on Low’s verbal claim of Najib’s conversation with the Saudi ruler.
When pointed out that it would have been prudent to have checked with the 1MDB board first or check with Najib himself, Shahrol said he did not do so as “at that time I had considered Jho to be a reliable channel of contact between me and Datuk Seri Najib.”
Najib’s trial before High Court judge Collin Lawrence Sequerah resumes on Monday.
