KUALA LUMPUR, March 22 — Former 1Malaysia Development Berhad (1MDB) director Tan Sri Ismee Ismail today confirmed that resolutions signed by former finance minister Datuk Seri Najib Razak were used to persuade or “goad” him into then signing on to 1MDB board resolutions on decisions taken by the Finance Ministry-owned company.
Ismee said this while testifying as the 13th prosecution witness in Najib’s trial involving 25 charges in relation to the alleged misappropriation of more than RM2 billion from 1MDB, and agreed that this was an upside-down process as the board should sign first before the shareholder signs.
Today, Najib’s lead defence lawyer Tan Sri Muhammad Shafee Abdullah questioned Ismee on the process involved when 1MDB’s board of directors made decisions with the directors separately and individually signing on to a document known as directors’ circular resolution (DCR), instead of through a board meeting that is held physically.
Ismee agreed with the suggestion that the best way to run a company to make a decision is to call a physical meeting, with Shafee saying this was because many things may be left unsaid if decisions are made via DCR and that the DCR method does not feature an interactive way of making a decision.
Ismee agreed with Shafee’s suggestion that his signing as a company director on to a DCR would be very much dependent on how much briefing he was given and him being satisfied with the briefing before signing.
Ismee agreed with Shafee’s suggestion that part of the reason why he would usually see who else had signed the DCR was he wanted the comfort that he was not the first one to sign, but further explained he wanted to see if any other directors had left comments after signing the DCR.
“Sometimes the signature page is a different page, I won’t be able to know who has signed, I want to see (if) any comments from fellow board members, so that’s why I want to see who else has signed,” he said.
Shafee then suggested that 1MDB’s management had an “unhealthy practice” of having an undated DCR and an undated shareholder’s resolution, and that these documents are then later given the same date which would not show who had signed first, asking: “You agree with me, this is a very unhealthy practice, because it does not reflect whether the board has made a decision that would be taken onboard by the shareholder to be advisory, because when board made decisions, shareholder would say this is their position.”
Ismee then said he agreed, also agreeing with Shafee’s suggestion that ideally these documents should be dated on different days and enough time for the board’s DCR to be shown to the shareholder to see before signing the shareholder’s resolution.
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Witness: Najib had signed first before all directors signed on 1MDB decisions
As 1MDB is owned by the Finance Ministry’s Ministry of Finance Incorporated (MOF Inc), Najib as the then finance minister would be the one signing off on decisions via 1MDB’s shareholder’s resolutions.
Ismee also confirmed that there were multiple times when he was given a 1MDB DCR to sign, that Najib had already signed off on the 1MDB shareholder’s resolution.
Shafee: Would you remember in particular, on which occasion that has happened, that as you are signing, after seeing (1MDB then chairman) Tan Sri (Che) Lodin (Wok Kamaruddin) has signed, you also noticed Datuk Seri Najib has signed, would you remember the occasion?
Ismee: That has happened, I think, on most occasions, if not all.
Shafee also asked if Ismee had ever asked 1MDB management personnel who gave him the DCR to sign on why Najib as the shareholder had already signed the shareholder’s resolution, when the directors have yet to sign on the DCR.
Ismee then said he did recall asking this during the early days of 1MDB, but noted “and they said ‘no, it has been discussed with PM’”. Najib was also the prime minister then.
Shafee then asked if Ismee or anyone had ever raised the issue of “why the governance is upside down” for 1MDB and whether Ismee knew this was not the right order of events for corporate governance purposes and for the shareholder to be better informed to make a considered decision.
Ismee then said he had never asked specifically in that manner, adding: “My thinking then was basically if it’s not something wrong, it’s just to show the wishes of the shareholder.”
Shafee argued it would be unfair to the prime minister if he is not given the benefit of the board of directors’ views before being asked to sign a shareholder’s resolution, and also highlighted that the way to run a company is for the directors to make a decision first before it is shown to the shareholder.
Asked if he would feel comfortable signing on to 1MDB DCR if other directors had already signed and if Ismee became even more sure when he saw Najib had also signed the shareholder’s resolution, Ismee said, “Correct”.
As for how 1MDB DCRs and 1MDB shareholder resolutions are brought to him, Ismee explained that the 1MDB management would present the DCR to him for his signature and that the 1MDB management would then raise Najib’s signed shareholder’s resolution.
“They will brief me, I will ask questions, I seek clarification, then somewhere along the line, they will say shareholders have agreed on this,” Ismee said.
Shafee: So all the time or most of the time, using your own words, when they asked you to sign your DCR, in the course of briefing you, they also put up this paper that says by the way, PM also signed?
Ismee: Something like that.
Ismee then agreed to Shafee’s suggestion that the 1MDB management was trying to persuade him by saying that then prime minister Najib had already signed his approval, further agreeing with Shafee’s suggestion of “it’s kind of goading you to sign”.
Asked by Shafee if he had ever told 1MDB management that “this is not on, the board should decide first before taking it to PM” and that the proper thing should be done instead of putting the “cart before the horse”, Ismee said he had raised this but “maybe not directly” and “not in that forceful manner”.
Ismee confirmed however that after he had raised this issue, the same thing of undated DCR and undated signed shareholder’s resolution as well as the subsequent dating of these two documents on the same day had kept recurring.
Shafee then asked if Ismee ever had the occasion to ask Najib if he had signed the shareholder’s resolutions due to having possibly seen then 1MDB chairman Lodin and then 1MDB CEO Datuk Shahrol Azral Ibrahim Halmi sign on to the DCR, with Ismee then saying no.
Previously for a 1MDB DCR and a 1MDB shareholder resolution both dated March 22, 2010, Ismee had testified that the DCR was only circulated to 1MDB board members after Najib had signed the shareholder’s resolution as there would be no reason for Najib to sign on the same day as the directors.
Ismee had previously testified that this is because the 1MDB management would have to explain the DCR to the directors and then chase them for their signature, and said that 1MDB directors would however not ask much and would agree to signing any DCR if they see that Najib had already signed the shareholder’s resolution.
Ismee had also explained that 1MDB chairman Lodin would usually have signed the DCR first before any of the directors, and that what would be most obvious and would not make Ismee question much is if he had seen Najib’s signature on the shareholder’s resolution, and had said: “I consider this matter had already been discussed further by the management and agreed to by Datuk Seri Najib.”
Najib’s 1MDB trial before High Court judge Datuk Collin Lawrence Sequerah is scheduled to resume tomorrow morning.
