Shahrol: Don’t blame 1MDB directors for loss-making investments

KUALA LUMPUR (Sept 25): The first chief executive officer of sovereign wealth fund 1Malaysia Development Bhd (1MDB), Datuk Shahrol Azral Ibrahim Halmi, said its board of directors (BOD) should not be blamed for the fund’s loss-making investments.

The witness said this was because all big decisions, including those pertaining to investments, required the approval of Datuk Seri Najib Abdul Razak — who was then the premier, Finance Minister and the chairman of the fund’s board of advisers.

“According to the company's Articles of Association (based on Article 117) the board must have written approval from the PM for any investment decision. Therefore everything that we did is in alignment with the wishes of the PM, Finance minister and board of directors of 1MDB,” the witness said during his examination-in-chief by senior deputy public prosecutor (DPP) Datuk Seri Gopal Sri Ram.

Article 117 states that any financial commitments, restructuring or anything to do with the government guarantee — for the interest of the company, country or government policy — needs the prime minister's written approval, granting Najib great control over the fund.

The article was inserted into TIA’s memorandum of articles and association sometime between August and September 2009, according to Shahrol and previous witness, Companies Commission of Malaysia assistant registrar of companies Rafidah Yahaya.

Investments brought up during Shahrol’s examination-in-chief include the PetroSaudi International-1MDB, the purchase of independent power producers like Tanjong Energy Holdings Sdn Bhd, Genting Sanyen Power Sdn Bhd and Jimah Energy Ventures Holdings Sdn Bhd via the issuance of US$1.75 billion.

All major decisions invoking Article 117 relayed by Jho Low.

Shahrol said when he was 1MDB CEO between 2009 and 2013, all major decisions were relayed to him by fugitive financier Low Taek Jho, better known as Jho Low, via email and BlackBerry Messenger, who claimed that the directives were approved by Najib, who was empowered to make such decisions through Article 117.

“All documents including talking points, action plan containing the facts towards the formation of TIA, rationale towards asking the loan, the government-to-government relationship between PetroSaudi International (PSI) and 1MDB, and the deal between Aabar or International Petroleum Investment Corporation (IPIC) and 1MDB, were obtained from him,” he said.

He added that different teams had typically worked “covertly” and “in silos” at TIA, without knowing the end goal of a task since the fund’s formation.

Shahrol said he suspected that the talking points and action plan given to 1MDB’s board of directors was the same as those given to officers at the Prime Minister's Office, like previous witness Datuk Amhari Efendi Nazaruddin and Najib’s late chief private secretary Datuk Azlin Alias.

“I suspect Jho Low gives the talking points and action plan to 1MDB officers like Casey Tang, Hazem, Azmi, Terence Geh and Jasmine Loo, after I got to know what they did without my knowledge. They are part of the covert team that work in silo with Jho Low,” he added.

Najib okayed all of Jho Low’s actions.

Shahrol maintained that all of Jho Low’s actions were approved by Najib.

Using the PSI and Aabar/IPIC deal as an example, Shahrol said he discovered that Jho Low had given directions to Loo, who was 1MDB’s legal counsel.

However, she had never informed the witness in detail about the PSI and Aabar projects, ostensibly so that he would only have “high-level knowledge” of the projects.

“Hence, I am convinced that Jho Low played a role as an orchestrator to Najib, involving on the planning with regards to all the investments,” he said.

“Everytime when I checked with Najib over the directives given by Jho Low, the premier would confirm that this was agreed by him and he directed me to take further action based on the directives given,” he said.

Shahrol said that as the PM, Najib was the highest decision maker in 1MDB and had the “ultimate power” to decide on matters relating to major investments, finance and national interests as mandated by Article 117.

“I as the CEO would only implement the daily running of the company and take into consideration the running must be in accordance with the PM who represents the Federal Government,” he added.

In Sri Ram’s opening statement, he had accused Jho Low and Najib of acting “as one at all material times”.

Najib is charged with four counts of abuse of power and 21 charges of money laundering to the amount of RM2.28 billion on 1MDB funds.

The hearing continues tomorrow before Justice Collin Lawrence Sequerah.

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