KUALA LUMPUR, Aug 4 — Former 1Malaysia Development Berhad (1MDB) CEO Datuk Shahrol Azral Ibrahim Halmi was grilled by the defence over his purported failure to check the authenticity of British Virgin Island-based company Aabar Investments PJS Limited (Aabar BVI).
Standing as the ninth prosecution witness in Datuk Seri Najib Razak’s corruption trial, Shahrol admitted in court that he and other senior officials of 1MDB did not conduct the necessary due diligence to determine whether Aabar BVI had any legal and formal relationship with Abu Dhabi’s Aabar Investment PJS or its parent company International Petroleum Investment (IPIC).
Under cross-examination, Najib’s lawyer, Tan Sri Muhammad Shafee Abdullah, quizzed Shahrol on why he and other 1MDB officials did not notice the difference in the two entities’ names in documents related to the transfer of US$577 million (RM2.43 billion) as a “security deposit” to IPIC’s purported subsidiary, Aabar BVI, in 2012.
Shahrol had also explained to Shafee that at the time, 1MDB had no reason to doubt the nature of Aabar BVI as IPIC managing director Kadem Abdullah al-Qubaisi and its wholly-owned Aabar Investments PJS chief executive officer Mohamed Ahmed Badawi Al-Husseiny was also listed as its executives.
Shafee: Did anyone from 1MDB, from your management, conduct due diligence to check that they (Aabar BVI) are related?
Shafee: Don’t you think that this is important? I know you have been entertaining this notion that representation provided by Kadem and Badawi that it must be true but over and above that as prudent management in 1MDB, don’t you think it was prudent to check?
Shahrol: Beyond informal checks that I conducted on my own personal desktop, and maybe some done by my senior staff, but they didn’t inform me, but there wasn’t any formal due diligence on the relationship of these companies.
Shafee had also pointed out to Shahrol that during Malaysia’s arbitration with IPIC due to the monies received by Aabar BVI in 2016, the Abu Dhabi company had denied any links to the British Virgin Island-based firm.
Shafee then asked Shahrol about the role of US investment bank Goldman Sachs, who at the time, in 2012, was being paid by 1MDB as a financial adviser for its plans to acquire power plant operator Tanjong Energy Holdings Sdn Bhd for RM10.6 billion.
Shafee had also asked Shahrol whether Goldman Sachs at the time, led by its former South-east Asia chairman Tim Leissner, should have warned 1MDB about the difference between the two entities, to which he agreed.
“If Goldman Sachs had alerted us that these were two different entities and had informed us that either they or they wanted us to do due diligence on the company, then yes, the current state of affairs might not have happened,” he said.
Shafee stated that 1MDB had been moving into many “cobra pits”, referring to its numerous dealings that purportedly were not in its best interests, and asked Shahrol whether the firm was run by “a bunch of idiots”.
Shahrol simply stated he reserved comment on such an accusation.
Shahrol had testified that he had previously signed an agreement on October 19, 2012, between 1MDB Energy Holdings Limited and the fake Aabar that justified a security deposit payment to the latter.
Shahrol again signed on with the purported IPIC subsidiary as, he said, its name did not have very significant differences with the real Aabar’s name.
On the same day of the October 19, 2012 agreement signing, a sum of US$1.64 billion from the US$1.75 billion bond went into 1MDB Energy (Langat) Ltd account also at the Falcon Bank in Hong Kong, but this was paid out on the same day in two transactions: US$692,174,991 or over US$692 million to Genting Power Holdings for the IPP takeover, and US$790,354,855 as security deposit to the fake Aabar.
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