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1MDB management conned Najib over investment agreement: Witness

THE STAR – The High Court was yesterday told that the management of 1Malaysia Development Berhad (1MDB) had conned former prime minister Datuk Seri Najib Razak and the company’s board of directors (BOD) into entering an investment agreement with its purported business partner PetroSaudi International Limited (PSI).

Former non-executive director of 1MDB Tan Sri Ismee Ismail, 58, who agreed with Najib’s lead counsel Tan Sri Muhammad Shafee Abdullah’s suggestion, also admitted that several members of the management had misled Najib and the BOD by crafting detailed proposals to enter into the investment agreement.

The lawyer then suggested that the said proposals were crafted by 1MDB’s former general counsel Jasmine Loo Ai Swan, former chief financial officer Azmi Tahir and Casey Tang Keng Chee (former executive director) and Datuk Shahrol Azral Ibrahim Halmi (former chief executive officer).

Muhammad Shafee: This is a 100 per cent con job. All the proposals were crafted by the 1MDB management. It was detailed crafting by the management. Ismee replied “yes”.

The senior counsel was referring to the deal where 1MDB agreed to convert its 40 per cent stake in the joint venture company 1MDB-PetroSaudi International Limited that it had bought at USD1 billion, into an Islamic loan to the same joint venture company.

Former Malaysian Prime Minister Datuk Seri Najib Razak at the Kuala Lumpur High Court. PHOTO: THE MALAY MAIL

The deal saw 1MDB agreeing to sell off the 40 per cent share to the joint venture company, by giving, on paper, the Islamic loan via Murabahah notes to the joint venture company at a value of USD1.2 billion.

With the conversion to the Murabahah notes, the joint venture company would on paper owe USD1.2 billion to 1MDB, effectively giving 1MDB a paper profit of USD200 million after accounting for the initial USD1 billion.

Explaining further on the conversion to the Murabahah notes, Muhammad Shafee told the court that the 1MDB management did a “magic show”, whereby the sovereign wealth fund would get the USD1.2 billion on paper, but not the actual cash.

Muhammad Shafee: From Shahrol Azral’s testimony, we got to know that he was being directed by fugitive businessman Low Taek Jho, better known as Jho Low, purportedly it was from Najib to do this (proposals).

This was a very detailed nitty-gritty of paperwork convincing enough for the BOD. Do you agree with me? Ismee replied “yes”.

Muhammad Shafee: In your wildest imagination, do you think Najib, the then PM would be involved in directing on how to con 1MDB? Can you imagine? Ismee answered “I don’t think any PM would have time for that”.

To another question, the 13th prosecution witness also agreed that 1MDB faced difficulties during an audit process when audit firm Ernst & Young (E&Y) queried on the USD700 million which was transferred out from 1MDB to the joint venture.

Muhammad Shafee: Do you agree with me that the management was dragging its feet for so long and not answering E&Y? Ismee replied “yes”.

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