Azmi Tahir said the money was intended to buy back the 49% shares held by International Petroleum Investment Company (IPIC) in 1MDB’s subsidiary companies, 1MDB Energy (Langat) Limited and 1MDB Energy Holdings Limited.
He said 1MDB wanted to regain control of both subsidiaries before listing them on the stock market.
The 49% shares were held by IPIC’s subsidiary, Aabar Investments PJS, as IPIC had helped 1MDB to guarantee its US$3.5 billion bonds in 2012.
Azmi told the court he was not aware of the difference between Aabar Investments PJS and Aabar Investments PJS Limited, registered in the Seychelles, until the authorities launched their probe against 1MDB in 2015.
“My former deputy Terence (Geh Choh Heng) previously assured me that both Aabar Investments PJS and Aabar Investments PJS Limited belonged to IPIC,” he said.
Geh is one of the missing individuals – along with businessman Low Taek Jho, former 1MDB general counsel Loo Ai Swan and 1MDB executive Tang Keng Chee – that the authorities are looking for.
Azmi also said 1MDB had to take two loans amounting to US$1.23 billion from Deutsche Bank Singapore between May and August 2014 for the purpose of buying back the 49% shares.
The loans consisted of a bridging loan of US$250 million and a facility loan of US$975 million.
The prosecution, in its opening statement, had said that more than US$175 million from the US$250 million bridging loan had been paid to Aabar Investments PJS Limited’s BSI bank account.
Meanwhile, it said, more than US$690 million from the facility loan was deposited into Aabar Seychelles’ account between Sept 3 and 30, 2014.
The prosecution said it would adduce evidence to show that part of the US$1.23 billion total loan, or RM49.9 million, had ended up in Najib’s bank account.
Azmi also said Low, better known as Jho Low, had suggested that 1MDB take up the loans from Deutsche Bank Singapore.
“He (Low) said he was negotiating with Deutsche Bank at that time on buying back the shares.
“I believe this had been agreed to by Najib,” he said, affirming that Low was Najib’s adviser on 1MDB matters.
Najib faces 25 charges of abuse of power and money laundering over alleged 1MDB funds amounting to RM2.28 billion deposited into his AmBank accounts between February 2011 and December 2014.
Deputy public prosecutor Ahmad Akram Gharib said the prosecution would be calling former 1MDB director Ismee Ismail.
He said ad hoc prosecutor Gopal Sri Ram would conduct his examination-in-chief of Azmi on another day.
The hearing before High Court judge Collin Lawrence Sequerah continues tomorrow.