Former 1MDB chief executive officer Shahrol Azral Ibrahim Halmi told the High Court that the then board of directors wanted to bring the money back home in 2012 and that he assigned the job to then 1MDB general counsel Loo Ai Swan.
Previously the court had heard that 1MDB paid US$1 billion in 2009 for a 40% stake in the joint venture while PetroSaudi held the remaining 60%. The funds were later converted into Islamic murabaha notes.
1MDB later paid another US$830 million in total between 2010 and 2011 for the same purpose. By 2012, the notes were said to be worth US$2.22 billion.
Shahrol told the court today: “I believe Jasmine (Loo) briefed each board of director individually about the repatriation plan.”
The then 1MDB directors were Ismee Ismail, Che Lodin Wok Kamaruddin, Ong Gim Huat and Ashwin Jethanand.
Najib’s lawyer Muhammad Shafee Abdullah then asked Shahrol why the board members did not convene a meeting to discuss the proposed repatriation and the necessary steps to get back the money.
“It doesn’t matter whether it is in US dollars or ringgit, the purpose is to bring back cash. But there was no meeting between the directors, and all of you only signed a directors’ circular resolution for the purpose. Do you agree that the board must sit and be educated on it?” he asked.
Shahrol disagreed, saying what was done was “acceptable” as the company wanted to close its accounts before March 31, 2012.
“There were time constraints,” he said.
Shafee then pointed out that the US Department of Justice (DoJ) described the restructuring of the joint venture funds into murabaha notes and subsequently shares in the oil company as “attempts to obscure 1MDB’s investment in the joint venture”.
The lawyer asked: “The whole idea of restructuring was to make it difficult for the board to understand the true value of the investment?”
“Yes,” Shahrol said.
Shahrol also told the court that Najib, as finance minister, authorised 1MDB to reinvest the said US$2.2 billion in any licensed fund management company, adding that as CEO, he could choose which companies to invest in.
He said Loo had shown him Najib’s shareholder resolution after the letter was signed.
“I believed that they (Loo and Low Taek Jho) consulted the prime minister,” Shahrol said.
1MDB later invested the US$2.2 billion into a hedge fund known as Bridge Global Absolute Return Fund SPC. The hedge fund was managed by a Cayman Island company.
Shahrol said Loo and former company deputy chief finance officer Geh Choh Heng recommended that 1MDB invest in the offshore company.
In its opening statement regarding the case, the prosecution had contended that 1MDB was holding “worthless papers” by 2012, after the company’s joint venture with Petro Saudi International ended.
Najib has been slapped with 25 charges of abuse of power and money laundering over alleged 1MDB funds amounting to RM2.28 billion deposited in his AmBank accounts between February 2011 and December 2014.
The hearing before High Court judge Collin Lawrence Sequerah continues.
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