KUALA LUMPUR (Nov 8): 1Malaysia Development Bhd (1MDB) did not suspect anything amiss when transferring US$330 million meant for PetroSaudi International Ltd (PSI) into the account of Good Star Ltd in 2011, despite its earlier experiences with Good Star in 2009, the High Court was told yesterday.
Former 1MDB chief executive officer Datuk Shahrol Azral Ibrahim Halmi said this was because the account number was provided by PSI, and the remittance form for the payment stated that the account belonged to PSI.
Shahrol, 49, was replying to defence counsel Tan Sri Muhammad Shafee Abdullah on PSI’s demand for the money to be transferred into the account of Good Star, a company owned by fugitive financier Low Taek Jho (Jho Low).
Shahrol was testifying against former Prime Minister Datuk Seri Najib Abdul Razak, who is facing 25 charges of money laundering and abuse of power, involving RM2.28 billion, over alleged 1MDB funds in his AmBank accounts.
Pointed out by Shafee that the Ambank remittance form used had stated the beneficiary’s name as PSI and not Good Star, Shahrol replied that the disclosure to Ambank was a “copy paste” of payment instruction from PSI.
"At the time there was no reason for me to be suspicious, it was just an account number given to us by a trusted partner," Shahrol said.
The prosecution witness said neither he nor 1MDB chief financial officer Radhi Mohamad suspected anything wrong in this although it later turned out that the account actually belonged to Good Star.
Asked whether he recognised Good Star’s account number at RBS Coutts, Shahrol said: “At that time I knew.” But he added that he thought Good Star was an affiliate of PSI.
Shafee: Datuk you were sending a lot of money, would it at least amount to negligence [on the part of 1MDB]?
Shahrol: I disagree.
Shafee: There was no diligence on your part, you and your team?
Shahrol: I disagree.
Earlier yesterday, Shahrol also did not agree with Shafee that it was the 1MDB board of directors that recommended Najib, as preference rights shareholder, to enter into an agreement for further disbursement of RM1 billion or US$330 million to PSI.
"I do not agree (that) the board (got) Najib to sign," Shahrol says, adding that it is also wrong to suggest that the board unambiguously had recommended for Najib to sign.
The US$330 million was part of PSI’s further drawdown under a Murabaha Financing Agreement (MFA) with 1MDB.
The MFA was entered between both parties after terminating their joint venture, which involved 1MDB injecting US$1 billion cash, of which US$700 million was diverted to Good Star.
Shahrol testified that he only knew Good Star was linked to Jho Low in 2015.
The diversion, which was done without prior authorisation from 1MDB’s board, had infuriated the fund’s former chairman Tan Sri Mohd Bakke Salleh, who then demanded Shahrol to recover the fund. Bakke resigned from 1MDB less than a month after the fund diversion in September 2009.
Even with the resignation of the chairman, coupled with the inconsistency in banking information, Shahrol said 1MDB’s board of directors and its chairman of the board of advisors Najib were satisfied and comfortable to work with PSI, especially after a working visit to PSI’s office in London.
Shahrol said he participated in the visit by the 1MDB board to PSI’s London office in May 2011, and subsequently met Najib at the former premier’s hotel there with all board members, together with PSI’s directors Tarek Obaid and Patrick Mahony.
"I wouldn't say they were 'very happy', the board was happy and comfortable with PSI, and satisfied with the explanation by PSI's Tarek Obaid and Patrick Mahony to our chairman of the board of advisors Datuk Seri Najib," Shahrol said.
"You were in both meetings between 1MDB board and PSI, and the meeting of 1MDB board, PSI, and Datuk Seri Najib?" Shafee asked, to which Shahrol said yes.
"You were satisfied with the explanation provided by PSI and the visit to their office?" Shafee asked, and Shahrol said yes.
Apart from this US$330 million, the Court was told that 1MDB had also remitted US$500 million under the MFA in September 2010.
Shahrol confirmed that including the initial US$1 billion cash injected for the JV with PSI, 1MDB’s disbursement to PSI and Good Star had totalled US$1.83 billion.
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