1MDB made no income from US$1 bil investment in Petro Saudi, says ex-CEO

Former 1MDB chief executive officer Shahrol Azral Ibrahim Halmi.

KUALA LUMPUR: Former 1MDB chief executive officer Shahrol Azral Ibrahim Halmi told the High Court in Najib Razak’s 1MDB trial that there were no returns from the sovereign fund’s RM1 billion investment into the companies purportedly linked to Petro Saudi International.

Shahrol agreed to a suggestion by ad hoc prosecutor Gopal Sri Ram that the two payments made to Low Taek Jho’s Good Star Limited account in RBS Coutts and into the 1MDB Petro Saudi joint venture account in JP Morgan on Sept 30, 2009 did not bring any benefit to the sovereign fund.

“Jho told me that US$700 million was paid to Good Star, which was a subsidiary of Petro Saudi International,” he said, adding that Low also informed him about a purported loan between Good Star and Petro Saudi leading 1MDB to deposit the money in RBS Coutts.

Shahrol also told the court that 1MDB’s board of directors had asked him, on behalf of the management to get back US$700 million paid to Good Star during 1MDB’s meeting on Oct 3, 2009.

However, the former CEO said Petro Saudi’s founder Tarek Obaid and company director Patrick Mahony, rejected 1MDB’s request to return US$700 million.

“They gave the reason that they had put their money into the 1MDB and Petro Saudi joint venture. They also claimed that if the money was returned, it may amount to a breach of contract,” Shahrol said.

He said that since the joint venture with Petro Saudi failed to produce any results, Low and his associate, Casey Tang, suggested to him to end the joint venture.

“They suggested that 1MDB convert our equity in the joint venture into Murabaha notes. They said the notes were worth US$1.2 billion at face value,” Shahrol said.

To convert to the Murabaha notes, Shahrol said 1MDB was obliged to subscribe to an additional US$1 billion in notes from Petro Saudi.

Earlier today, Shahrol told the court that former 1MDB chairman Bakke Salleh had questioned the joint venture between the sovereign fund and Petro Saudi.

“He questioned who the people in Petro Saudi were and their identities during a special board meeting on Sept 18, 2009,” he added.

Shahrol said Bakke also questioned why the US$700 million was paid to Good Star.

“I told Tan Sri during our meeting on Oct 3, 2009 that Jho said Good Star belongs to Petro Saudi. He was not satisfied with my explanation and scolded me and Casey,” he said, adding Bakke later resigned on Oct 19, 2009.

Najib is standing trial for 25 counts of money laundering and abuse of power charges over alleged 1MDB funds amounting to RM2.28 billion deposited in his AmBank accounts between February 2011 and December 2014.

The hearing continues before High Court judge Collin Lawrence Sequerah on Sept 26. - FMT