Ex-1MDB chair says resigned as felt ‘something wrong’ was happening, suspected Najib involved in US$700m payout against board’s orders

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1MDB witness Tan Sri Mohd Bakke Salleh is pictured at Kuala Lumpur High Court May 8, 2022. — Picture by Shafwan Zaidon
1MDB witness Tan Sri Mohd Bakke Salleh is pictured at Kuala Lumpur High Court May 8, 2022. — Picture by Shafwan Zaidon

KUALA LUMPUR, May 9 — Tan Sri Mohd Bakke Salleh today said he had resigned as chairman of 1Malaysia Development Berhad (1MDB) in 2009 as a sign of protest, following his suspicions that “something wrong” was going on at the Finance Ministry-owned company.

Bakke said this while testifying as the 15th prosecution witness in former prime minister Datuk Seri Najib Razak’s trial over the alleged misappropriation of more than RM2 billion of 1MDB funds.

Bakke also suspected that former finance minister Najib was involved in 1MDB affairs and that either Najib or his representative Low Taek Jho were the “higher level” who had instructed for US$700 million out of US$1 billion of 1MDB funds to be transferred out without the 1MDB board’s knowledge or agreement.

Bakke said he had personally prepared his official letter dated October 19, 2009 to inform Najib of his resignation as 1MDB chairman, and that no one had instructed him to resign.

“My resignation was due to the fact that the management of 1MDB refused to follow the instructions of the board of directors. As a chairman, I resigned as a sign of protest and I did not want to be involved in any discussions and decisions regarding 1MDB,” he told the High Court today.

Before sending in his resignation letter, Bakke said he had first sent a text message to Najib to inform him of the 1MDB management’s failure to follow the 1MDB board’s instructions on several matters relating to a joint venture deal involving US$1 billion of 1MDB funds, but that Najib did not reply.

“I did not receive any response from Datuk Seri Najib. It did not cross my mind to report to any relevant authorities on the financial misconduct of the management of 1MDB because I assumed that I had already done so through my SMS sent to Datuk Seri Najib,” he said.

“I hoped Datuk Seri Najib will take necessary actions against the management of 1MDB if he found any misconduct on their part.

“Since my concerns did not get Datuk Seri Najib’s attention as he did not reply my SMS, I had a feeling that he was involved and something wrong was happening without my knowledge. This was one of my main reasons I decided to resign as Chairman and a member of 1MBD’s board of directors,” he added.

Later when asked by lead prosecutor Datuk Seri Gopal Sri Ram, Bakke confirmed that this was not the first time he had sent an SMS to Najib and that the latter would usually respond to the text messages, agreeing that he found it unusual when Najib did not respond on this occasion.

Bakke said he had met Low at Najib’s office then at the Defence Ministry and deputy prime minister’s office at Putrajaya between 2008 and early 2009, and that Najib had also supported Bakke’s contribution to TIA’s formation before Low offered him to join the TIA board. — Picture via Facebook
Bakke said he had met Low at Najib’s office then at the Defence Ministry and deputy prime minister’s office at Putrajaya between 2008 and early 2009, and that Najib had also supported Bakke’s contribution to TIA’s formation before Low offered him to join the TIA board. — Picture via Facebook

What led to the first resignation

The company was initially formed as the Terengganu Investment Authority (TIA) on February 27, 2009 with the aim of being a sovereign wealth fund for Terengganu’s development.

Bakke claimed that Najib was already “indirectly involved” in the early stages of TIA’s formation, noting that the appointments of directors and senior management of the company were managed by Low whom he described as the “coordinator” representing Najib and the Terengganu palace.

Bakke said he had met Low at Najib’s office then at the Defence Ministry and deputy prime minister’s office at Putrajaya between 2008 and early 2009, and that Najib had also supported Bakke’s contribution to TIA’s formation before Low offered him to join the TIA board. Following a ceremony with the Terengganu sultan at the state palace arranged by Low, Bakke and several others had been appointed as TIA steering committee members.

Bakke was appointed as a TIA director on March 10, 2009 and voluntarily decided to resign as director on April 7, 2009, after being told by Low that the Terengganu state government was not interested to proceed with the issuance of a RM5 billion Islamic bond and that the federal government would likely take over TIA.

No decisions on investment activities were made by TIA during Bakke’s brief one-month term as TIA director, and he was also not involved in discussions or decisions on the terms of the RM5 billion bond and was only involved in the early stages such as appointments of consultants and advisers for the bond.

For his resignation as a TIA director, Bakke said he had only discussed the resignation with Low “because at that time, I had the impression that Jho Low was the coordinator of TIA and the representative to Datuk Seri Najib” and as Low was the one giving updates about the company to the directors.

Bakke said he was reappointed as director on August 11, 2009 when TIA was in the process of being taken over and being renamed as 1MDB, explaining that he agreed to do so after Low contacted him by phone that same month .

“Jho Low requested me to rejoin 1MDB. According to Jho Low, DS Najib requested me together with Tan Sri Che Lodin and Tan Sri Azlan Zainol to rejoin 1MDB because there were investments and businesses to be undertaken by 1MDB which required our expertise,” he said, noting that Low had said it was important for Malaysia’s economic development.

“I agreed to it as it was a request from DS Najib through Jho Low,” he said, confirming that Najib had on September 17, 2009 issued a letter to approve his appointment as 1MDB director.

Later when asked by Sri Ram, Bakke agreed that the fact that Najib did issue the appointment letter — which happened as Low said the prime minister would — had “reinforced” his views about Low’s relationship with Najib.

TIA was on September 25, 2009 renamed as 1MDB, and became fully-owned by the Finance Ministry’s MOF Inc.

Datuk Seri Najib Razak is pictured at the Kuala Lumpur High Court May 9, 2022. — Picture by Shafwan Zaidon
Datuk Seri Najib Razak is pictured at the Kuala Lumpur High Court May 9, 2022. — Picture by Shafwan Zaidon

Why Bakke resigned, again

After being shown a proposal — for a joint venture deal requiring 1MDB to pump in US$1 billion — for the first time in a September 18, 2009 board meeting, the 1MDB board directed the 1MDB management to carry out further due diligence and carry out independent valuation of assets in the proposed joint venture by the next board meeting on September 26, 2009. The management however failed to carry out the necessary due diligence.

Just before the September 26, 2009 1MDB board meeting could start, Low who was present in the meeting room passed his own handphone to Bakke and said “PM on the line, want to speak to you”, with Bakke confirming today that he was certain it was Najib himself on the line.

Bakke said that from the telephone conversation, Najib showed a “strong interest” in wanting 1MDB to quickly proceed with the investment via the joint venture deal requiring US$1 billion of 1MDB funds, and that he had conveyed to the other directors about Najib’s instructions to expedite the decision on the joint venture proposal with purported Saudi firm PetroSaudi International (PSI).

Despite finding no steps taken by the 1MDB management for the due diligence and independent valuation, the 1MDB board of directors on September 26 “unanimously agreed with the joint venture after receiving instructions from Datuk Seri Najib and also to maintain the country’s interest since this joint venture involves government-to-government with Saudi Arabia”.

“I thus agreed with the instructions in good faith. Regardless, this decision was made on the PM’s insistence to expedite the implementation of the joint venture and also maintain the substance of the investment between PSI and 1MDB,” he said.

Asked by Sri Ram why the September 26, 2009 board meeting minutes did not record that such a phone call with Najib had taken place, Bakke said this was due to a “consensus” among the 1MDB directors “since that conversation was with the PM, we decided not to record or reflect it in the minutes”.

“And also the fact that the telephone conversation was before the formal commencement of the meeting, that was another reason as well, but more importantly we didn’t want to reflect anything linked to the prime minister,” Bakke said.

Bakke agreed that the content of the phone conversation with Najib did have an impact on the other 1MDB directors, noting: “Yes, because you know, I emphasise to them the urgency of the matter because the PM wants us to firm up the decision, and PM was saying this thing has been discussed over quite some time, been dragging on — You know, to the effect that we had to quickly make a decision and he was looking forward to signing of this agreement. All these things were shared with fellow board members.”

While the 1MDB board had ordered for the company’s US$1 billion (which used money from the RM5 billion Islamic bond) to be transferred to the joint venture firm 1MDB-PetroSaudi Limited’s bank account, the money was transferred out in two batches of US$700 million and US$300 million to other bank accounts instead without any knowledge of the 1MDB board which only found out at the next board meeting on October 3, 2009.

With the 1MDB board feeling angry and dissatisfied over the suspicious transfers of 1MDB money, Bakke said he had on October 3, 2009 separately met with the other board members (Tan Sri Che Lodin Wok Kamaruddin, Tan Sri Ismee Ismail, Tan Sri Azlan Mohd Zainol) where he suggested that all of them resign due to their lost in trust in the 1MDB management and that these directors had nodded in agreement.

“I suspected that there were probably instructions given by a higher level to Datuk Shahrol regarding the fund transfer of US$ 700 million but I never questioned him throughout my tenure as a member of the board of directors. ‘By the higher level’ I meant probably Jho Low or Datuk Seri Najib,” he said.

After the 1MDB embezzlement issue arose in early 2015, Bakke said he had met former 1MDB CEO Datuk Shahrol Azral Ibrahim Halmi who said he had the mandate from Najib to transfer the funds, but noted that Shahrol Azral did not show documents to back his assertion.

After waiting for the October 3, 2009 board minutes to be verified in the next board meeting, Bakke then instructed his secretary to send his October 19, 2009 resignation letter directly to the prime minister’s office in Putrajaya, as he had the feeling that Najib may convince him to stay if he had delivered the letter personally.

“I did not announce my resignation at that time to maintain Datuk Seri Najib’s reputation. In fact I also agreed with Tan Sri Azlan who said he will resign shortly to not offend or embarrass the PM Datuk Seri Najib and to prevent the PM from thinking that we did not want to help him in 1MDB,” he said.

Bakke said Azlan then waited until January 11, 2010 to resign to “avoid any misconception or cause any controversy” among the public on Najib and 1MDB, which could have happened if the two directors had resigned on the same date.

The prosecution had on the first day of trial said it would show that US$700 million from the US$1 billion for the purported joint venture were sent to Low’s Good Star Limited, and that a US$20 million sum (equivalent to RM60,629,839.43) from the US$700 million had allegedly made its way to Najib’s bank account.

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