KUALA LUMPUR, 1MDB’s joint-venture with PetroSaudi International Ltd (PSI) in 2009 was a failure, the High Court in Najib Razak’s corruption trial heard today.

1MDB ex-CEO Shahrol Azral Ibrahim Halmi said this when cross-examined by Najib’s lawyer Muhammad Shafee Abdullah on day 31 of the proceedings before judge Collin Lawrence Sequerah.

Under the joint venture agreement, 1MDB paid US$1 billion in 2009, representing a 40% shareholding, while 60% was held by PSI.

It was revealed in court last week that a Turkmenistan oil field, purportedly valued at US$3.518 billion, did not belong to PSI while the Argentina oil field was worth only US$108 million.

Shahrol, the ninth prosecution witness who has been on the stand from Sept 23, also disagreed to Shafee’s question that he was part of a conspiracy to put Najib in a compromised position.

Shafee: You are like the Malay proverb, “Cuba menegak benang basah” (trying to defend the indefensible). It is clear on your part that the conspiracy is to put the PM (Najib) in a compromised position.

Shahrol Azral: I disagree.

On another matter, Shahrol said 1MDB paid an additional US$500 million to PSI in 2010 after the initial US$1 billion equity in the joint-venture company was converted into Murabaha notes.

“PSI was committed to pay 8.25% interest per annum to 1MDB,” he said.

1MDB had borrowed the US$500 million from local banks to lend to PSI.

Shafee: Was it sensible to borrow to lend to PSI?

Shahrol: Yes, the borrowing rate here was lower.

Shafee: Was 1MDB empowered to be moneylender?

Shahrol: Yes.

Shafee: Did you have a licence from Bank Negara Malaysia?

Shahrol: No.

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.

Hearing before Sequerah continues.