Defence Ex 1mdb Ceo Lock Horns Over Support Letter For 1mdb Aabar Bvi Bond Deal

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1MDB TRIAL | Najib Abdul Razak’s defence team and 1MDB’s former CEO locked horns in court today over whether the latter understood the full implication of signing a Finance Ministry’s letter of support for the issuance of US$3 billion in bonds from a joint venture between the sovereign wealth fund and Aabar Investment PJS Limited (Aabar BVI)
Counsel Wan Aizuddin Wan Mohammed was grilling the ninth prosecution witness, Shahrol Azral Ibrahim Halmi, over the impact of the latter signing the 2013 letter which purportedly, in effect, acted as a guarantee from the Malaysian government that the bonds’ issuer would repay 100 percent of the principal
The exchange took place during former prime minister Najib’s 1MDB corruption trial at the Kuala Lumpur High Court
The letter of support was for the joint venture between 1MDB and Aabar BVI, through which 1MDB would commit US$3 billion while Aabar would also commit US$3 billion
However, the deal was actually with the British Virgin Islands-based Aabar which was masquerading as a subsidiary of Abu Dhabi's International Petroleum Investment Company (IPIC). In the end, Aabar BVI did not deliver on its US$3 billion commitment
During the proceedings today, Shahrol said that he had no direct involvement in the wording of the terms of the letter and that the defence team should instead be questioning the Finance Ministry representative who drafted the letter in the first place
The witness was being cross-examined by Wan Aizuddin over several detailed paragraphs in the letter of support which was produced in court as an exhibit today
Shahrol: I have no direct knowledge. This letter was signed by the MOF (Finance Ministry) so the party to explain is the MOF
Wan Aizuddin: When you signed on behalf of 1MDB, you are stating that you agreed to the terms of the letter of support. You cannot be saying (now) that you signed something you did not understand
Shahrol: Yes, I understood it at a high level, but asking me to explain line by line (the letter of support) is not fair. You have to ask (Siti) Zawiyah (an officer from the MOF who was alleged to be involved in the letter)
At this juncture, judge Collin Lawrence Sequerah asked Wan Aizuddin where was the defence heading to with its line of questioning as Shahrol had no personal knowledge on the specific detailed wording of the letter
The lawyer answered that the defence needed to pursue this line of questioning in order to ascertain whether Shahrol, as the then 1MDB CEO, truly understood the full implication of having signed the document
When cross-examination resumed, Shahrol explained that on a plain reading of the letter of support, it was not a guarantee for the bonds themselves but a MOF guarantee that the issuer would repay
Shahrol said this was because the issuer was a subsidiary that was 100 percent owned by 1MDB, which itself was wholly owned by the MOF
The said subsidiary-issuer was 1MDB Global Investments Limited (1MDB GIL). Najib at the time in 2013 was also finance minister and chairperson of 1MDB's board of advisors in 2013
Najib Abdul Razak“If there was a default, there was a trigger clause, which was that the government guarantees, and there (may be a) cascading effect which would trigger the government security, which would have a huge effect
“I signed with knowledge and advice by Goldman Sachs,” Shahrol said
Goldman Sachs is a US-based multinational investment bank which was the financial advisor for the bond deal in 2013
Wan Aizuddin: You cannot now say that this 'was not prepared by me, I do not understand the implication'
Shahrol: You are asking me about the details of the drafting. I understood it from a high level, and the big shareholder Najib (as then finance minister, who headed Minister of Finance Incorporated which was the shareholder of 1MDB) agreed to it, so I went along
As the proceedings would to the close for the day, Sequerah asked the defence team whether they could wind up cross-examination of Shahrol at the next trial dates namely Aug 17 to 19 to which lead defence counsel Muhammad Shafee Abdullah replied in the affirmative
The trial was then adjourned for Aug 17
Najib is on trial over four charges of abusing his position to obtain gratification and 21 counts of money laundering in relation to RM2.28 billion in 1MDB funds. - Mkini

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