Former 1MDB CEO and director Shahrol Azral Ibrahim Halmi said he only came to know about the discrepancy after the matter was reported in local media in July 2015.
“I did not know in 2009 and 2010 (when 1MDB sent US$1.83 billion) but was only aware in 2015 after reading a report in The Edge Markets,” he said when cross-examined by lawyer Muhammad Shafee Abdullah.
Shahrol by then was no longer the CEO but only remained a director of the government-linked company until 2016.
Shahrol also agreed with Shafee’s suggestions that 1MDB looked like a fool when the PSI Turkmenistan asset was “wiped out under our feet”.
In the joint venture agreement, 1MDB had in 2009 paid US$1 billion that represented 40% shareholding while 60% was held by PSI.
1MDB pumped in another US$830 million in 2010 as the value of assets — two oil fields in Argentina and Turkmenistan that belonged to PSI — was said to be bigger than the capital injected by 1MDB.
Shafee today revealed the Turkmenistan oil field, purportedly valued at US$3.518 billion, did not belong to PSI while the Argentina oil field was worth only US108 million.
Valuer Edward Morse, who was appointed by PSI, had quoted the value for the oil fields in its report dated Sept 29, 2009.
The Edge Report said PSI was only in negotiations to buy the Turkmenistan asset from Buried Hill Energy (Cyprus) Co Ltd but the deal fell through on Nov 23, 2009.
Shafee: Is this a staggering difference (the US$1.83 billion compared to US$108 million asset owned by PSI)?
Shahrol: Yes.
Shafee: Do you think 1MDB was cheated?
Shahrol: Yes.
The witness said the 1MDB board in 2015 did not query him why the company paid the US$1.83 billion when he was the CEO.
Shahrol also said he did not take full measures to protect the interests of 1MDB.
“In hindsight, I should have asked for more guidance from the board members who were luminaries in business and finance,” he said.
Shahrol said he was rushing to complete the joint venture due to its strategic importance for Malaysia and Saudi Arabia.
“I also trusted (1MDB executive director) KC Tang and Jho Low (Low Taek Jho) (fugitive financier) in executing the investment as they said everything was in order,” he said.
Shahrol said he had informed the board that Low was also advising PSI on the joint venture but that was not recorded in the minutes of meetings.
Najib is facing 25 charges of money laundering and abuse of power over alleged 1MDB funds in his AmBank accounts.
He is accused of abusing his position to obtain RM2.28 billion in bribes in February 2011 and December 2014.
He is also said to have transferred RM2.28 billion in illegal funds to his bank accounts and to have subsequently used the money.
The hearing before High Court judge Collin Lawrence Sequerah was adjourned to Oct 29.