Former 1MDB chief executive Mohd Hazem Abdul Rahman said opposition politicians had questioned the high price paid to buy Tanjong Energy Sdn Bhd and Genting Sanyen Sdn Bhd; as well as the US$200 million in fees paid to international bankers Goldman Sachs for a bond issue.
The opposition had also questioned why the purchases were kept under wraps, Hazem said.
“In my opinion, Jho Low’s answers were merely excuses made up to avoid the Tanjong Energy and Genting Sanyen issues from further being escalated,” he said, referring to the fugitive businessman’s nickname.
“I was not brave at that time to voice out my opinion on the real state of affairs as I feared it may threaten my career,” Hazem said in his witness statement at the trial of former prime minister Najib Razak.
Najib is accused of 25 charges of abuse of power and money laundering relating to the deposit of RM2.28 billion, allegedly linked to 1MDB, in his bank accounts between 2011 and 2014.
The court heard that 1MDB had raised a total of US$3.5 billion in a bond issue through Goldman Sachs to fund the purchases of Tanjong Energy and Genting Sanyen.
Exorbitant price paid for power plants, says witness
Hazem said his personal opinion was that the two companies were purchased at an exorbitant price which inflicted a financial loss on 1MDB.
“On Goldman Sachs’ fees, I must admit the fees were high but this issue could have been avoided if the bonds issuance was not rushed by Jho Low.
“Regarding the issue on the purchases being kept under wraps, I think that 1MDB should have issued the bonds in an open market, where the cost will be cheaper and more competitive,” Hazem said.
Hazem previously worked in several financial instructions and a GLC before joining 1MDB in 2012.
The witness also said that too many government guarantees were obtained for 1MDB’s joint venture with Abu Dhabi Investment Company to carry out the Tun Razak Exchange and Bandar Malaysia projects.
“A sum of US$3 billion needed to be raised through bond offerings, and Goldman Sachs suggested that we seek a letter of support from the government,” Hazem said.
In answer to deputy public prosecutor Mohamad Mustaffa P Kunyalam, Hazem said the US$3 billion could not have materialised without Najib’s letter of support.
“To me, a letter of support is the same as the government guarantee. Ultimately, the government needs to come in and settle our debts if we cannot pay,” he added.
The hearing continues before High Court judge Collin Lawrence Sequerah on Tuesday.