Najib’s trial: Deutsche Bank officer says no sanctions, negative publicity detected when US$110m transferred out in 2011 as 1MDB instructed

KUALA LUMPUR, June 9 — Deutsche Bank had carried out internal checks on PetroSaudi International Limited and did not find any sanctions against the company, before transferring US$110 million of 1Malaysia Development Berhad’s (1MDB) funds in 2011 to this company on 1MDB’s instructions, the High Court heard today.

Fatehah Md Salleh, assistant vice president of global market operations at Deutsche Bank (Malaysia) Berhad, said this while testifying as the 22nd prosecution witness in former prime minister Datuk Seri Najib Razak’s trial over the misappropriation of more than RM2 billion of 1MDB funds.

Fatehah today verified documents relating to Deutsche Bank’s role in helping 1MDB transfer US$110 million in 2011 to an RBS Coutts Bank account which only had an account number of 11116073.2000.

Fatehah said the documents showed that Deutsche Bank had asked 1MDB to confirm the details of the recipient and owner of this 11116073.2000 bank account, and noted that PetroSaudi International had then asked for bank records to omit its name as the recipient of the US$110 million and to only use the account number.

Fatehah today said Deutsche Bank had on May 27, 2011 received instructions for the US$110 million transfer, citing 1MDB’s May 27, 2011 letter signed by its then CEO Datuk Shahrol Azral Ibrahim Halmi to ask Deutsche Bank (M) Berhad to forward US$110 million of 1MDB funds via Deutsche Bank Trust Company America to JP Morgan Chase New York and eventually to the RBS Coutts Bank account number 11116073.2000.

Attached with this letter was an earlier May 25, 2011 letter from PetroSaudi’s Tarek Obaid to 1MDB, where PetroSaudi confirmed that the name of the recipient of the money should be just the RBS Coutts account number and not PetroSaudi International Limited, and also stating that this bank account had previously received US$30 million on May 20, 2011 and US$65 million on May 23, 2011.

The Foreign Exchange and Money Market division in Deutsche Bank Malaysia which Fatehah was then part of had then carried out background checks using the bank’s internal screening systems Preventive Crime Research (PCR) and HotScan on both PetroSaudi and RBS Coutts Bank.

Fatehah explained that the PCR screening system detects if there are any “adverse media” or unfavourable news reports, saying that “no hit” was recorded for both PetroSaudi and RBS Coutts Bank Ltd Zurich.

Similarly, for the “HotScan” system which she said detects if there are any sanctions, there were also “no matches found” for the checks on the company PetroSaudi and the bank RBS Coutts.

Following the background checks clearing PetroSaudi and the RBS Coutts bank, Fatehah said that her colleague and teammate Jason Lim had then requested in an email to Deutsche Bank’s global markets division or the front office to confirm the purpose of the US$110 million payment.

Fatehah said Lim had also emailed Deutsche Bank’s head of sales (business) Jacqueline Ho who then confirmed the US$110 million transfer as being for “a loan to a non-resident”, and that Lim had then attached the PCR and HotScan findings when emailing both Ho and Deutsche Bank’s head of operation Jeremy Lewis to seek approval for the US$110 million transaction.

After Lewis and Ho gave their approval, the US$110 million was then paid out to PetroSaudi, Fatehah said.

Fatehah confirmed that the US$110 million transfer on May 27, 2011 that Deutsche Bank carried out on behalf of 1MDB was based on instructions given in the two letters by 1MDB and PetroSaudi.

Prior to Fatehah’s testimony, Deutsche Bank Malaysia Berhad’s vice-president of global markets operations Nur Hasnee Taha Mdd Nordin also testified as the 21st prosecution witness in Najib’s 1MDB trial.

Nur Hasnee Taha had testified of how Deutsche Bank had received a total of RM3.487,325 billion in five transactions on September 30, 2009 from 1MDB’s RHB Islamic Bank account.

He said the RM3.487 billion was transferred from 1MDB’s RHB Islamic Bank account to Deutsche Bank for a foreign exchange transaction, as 1MDB wanted to buy US currency totalling US$1 billion.

Out of the US$1 billion fund purchased by 1MDB, Deutsche Bank had then followed 1MDB’s instructions to transfer US$700 million to the RBS Coutts AG Zurich bank account of 11116073 and the remaining US$300 million sum to a JP Morgan SA Geneva bank account, with all funds transferred on September 30, 2009.

Nur Hasnee also confirmed Deutsche Bank’s role of helping 1MDB to purchase US$110 million of US currency in another foreign exchange transaction, with 1MDB’s AmBank account transferring RM335.115 million in two transactions to Deutsche Bank on May 27, 2011 for this purpose.

This same US$110 million was the one that Deutsche Bank helped 1MDB transfer to the RBS Coutts account 11116073.2000 on May 27, 2011 on 1MDB’s instructions.

“I confirm that 1Malaysia Development Bhd as a customer of Deutsche Bank (Malaysia) Berhad had instructed the transfer to RBS Coutts Bank AG, account number: 11116073.2000 for US$110,000,000,” he told the High Court.

At today’s 1MDB trial, Deutsche Bank had a lawyer present to hold a watching brief.

Who owns the mysterious RBS Coutts account

Even though the RBS Coutts account appeared to be portrayed to bank officials as having links to PetroSaudi International, former 1MDB CEO Datuk Shahrol Azral Ibrahim Halmi had testified in this trial that Low Taek Jho had later told him the RBS Coutts bank account 11116073 belongs to Good Star Limited.

The prosecution had on Day One of Najib’s 1MDB trial said that it will prove Good Star is a company owned and controlled by Low, and had also said it will show that US$20 million of the US$700 million sent in 2009 to Good Star allegedly eventually ended up with Najib.

Najib’s lead defence lawyer Tan Sri Muhammad Shafee Abdullah had previously suggested that 1MDB officers such as Shahrol should have known by 2011 that the RBS Coutts bank account number 11116073.2000 belonged to Good Star instead of PetroSaudi, as the strikingly similar account number 11116073 that was identified to be Good Star’s account was also given in 2009 to 1MDB.

Shafee had highlighted the extra “2000” in Good Star’s account number 11116073.2000 was merely in reference to the transactions being in USD, but Shahrol had previously said that 1MDB officers had no reason to be suspicious then and that he had only read in 2015 news reports that Good Star belonged to Low.

As for why 1MDB kept transferring money to Good Star, the transactions were actually purported to be for 1MDB’s investment via a joint venture initially with PetroSaudi and subsequently investments through alleged loans given out to PetroSaudi, but all these have since turned out to be a sham with 1MDB monies lost.

1MDB was initially meant to put all US$1 billion into the joint venture company 1MDB PetroSaudi Limited’s bank account.

But 1MDB had on September 30, 2009 instead followed PetroSaudi’s law firm’s instructions in transferring the money in two separate sums of US$300 million to the JV firm’s Swiss-based JP Morgan account and US$700 million to Good Star’s RBS Coutts account number 11116073.

1MDB later tried to further carry out purported investments by giving out loans to PetroSaudi, including a US$330 million loan that was instead sent in four batches to Good Star, namely US$30 million (May 20, 2011), US$65 million (May 23, 2011), US$110 million (May 27, 2011) and US$125 million (October 25, 2011).

Najib’s 1MDB trial before High Court judge Datuk Collin Lawrence Sequerah is scheduled to resume next Monday, with Salmah Daman Huri who is vice president of Treasury Operation Department at Ambank (M) Berhad expected to continue testifying as the 23rd prosecution witness.