Zahid says he gave charity’s RM10m to firm for ‘investment’ on verbal agreement only

KUALA LUMPUR, June 30 — Umno president Datuk Seri Ahmad Zahid Hamidi today insisted that Yayasan Akalbudi’s RM10 million cheque which he had signed off on was meant to be an “investment” in the company Armada Holdings Sdn Bhd, but confirmed there was no written agreement for the purported investment.

Testifying in his own defence in his trial over alleged criminal breach of trust of the charity Yayasan Akalbudi’s funds, Ahmad Zahid instead said this RM10 million “investment” was done verbally.

Yayasan Akalbudi — where Ahmad Zahid is a trustee and its sole signatory for cheques — had issued the RM10 million cheque dated November 16, 2015 to Armada, with the company then in February 12, 2016 issued two cheques to Yayasan Akalbudi for the RM10 million and also a sum of RM69,722.65 from interest garnered while the money was in a fixed deposit.

While the prosecution’s case is that Ahmad Zahid had given out Yayasan Akalbudi’s RM10 million as a loan to Armada and that this is in breach of Yayasan Akalbudi’s objectives as a foundation to help the poor, Ahmad Zahid continued to insist it is a investment and that this is allowed under Yayasan Akalbudi’s objectives.

Lead prosecutor Datuk Raja Rozela Raja Toran today asked: “If it is truly an investment, there is no black and white, or contract between Yayasan Akalbudi and Armada when the RM10 million is given?”

Ahmad Zahid: Just verbal agreement.

Raja Rozela: Datuk Seri, RM10 million is not little, ya?

Ahmad Zahid: Correct.

Raja Rozela: RM10 million is not Datuk Seri’s money.

Ahmad Zahid: Yayasan’s money.

Raja Rozela: That RM10 million of Yayasan’s money is for the interests of the poor.

Ahmad Zahid: Correct.

Raja Rozela: So you made the decision to invest RM10 million to Armada which is not categorised as the poor.

Ahmad Zahid: Armada is not asnaf, but as I explained in this court, it is an investment, the profit is used to help the poor, while the principal or the original capital is not terusik (touched). Therefore, the returns of investment that I stated, if the agreement is not successful in being carried out, that interest is used for asnaf. That’s why RM69,000 was credited to Yayasan’s account and that RM10 million was returned to Yayasan.

Yayasan Akalbudi’s company constitution or memorandum and articles of association states that its objective is to “receive and administer funds for the eradication of poverty and the enhancement of the welfare of the poor and to conduct studies and research relevant to the poverty eradication programme”, and that the foundation could do the items listed from 3(a) to 3(v) for such purposes.

Ahmad Zahid today cited item 3(q) as allowing Yayasan Akalbudi to carry out an investment by issuing the RM10 million cheque, where it was stated the charitable organisation could “invest in Malaysia the money of the foundation not immediately required in such manner as from time to time the foundation acting through its board of trustees may think fit”.

But Raja Rozela suggested that the RM10 million which Ahmad Zahid insisted was an investment was not done with the approval of Yayasan Akalbudi’s board of trustees and that the trustees did not even meet to discuss the purported investment, with Ahmad Zahid then blaming Yayasan Akalbudi’s company secretary for the lack of such a document.

Raja Rozela: You don’t have resolutions to show this RM10 million investment was approved, correct or not?

Ahmad Zahid: I left it to the company secretary then.

Raja Rozela: I say there was no meeting, discussion with any board of trustees about this RM10 million.

Ahmad Zahid: That is the kesilapan (mistake) of the company secretary.

When Raja Rozela then repeated her question that there was no meeting or discussions by the Yayasan Akalbudi board of trustees to approve the RM10 million transaction, Ahmad Zahid continued to insist that there were discussions on the matter.

Raja Rozela: And if it is true there was such a discussion, it is not recorded anywhere, true or not?

Ahmad Zahid: Because the resolution should have been prepared by the company secretary.

Raja Rozela: The meeting or discussion was not recorded anywhere, I didn’t ask about resolution or decision, I say the discussion is not recorded anywhere, no records to show there was a discussion among the board of trustees about the RM10 million.

Ahmad Zahid: That is the company secretary’s mistake, not my mistake.

Later, Ahmad Zahid also disagreed with Raja Rozela's suggestion that he had given the RM10 million to Armada on his own without discussing with the other trustees of Yayasan Akalbudi.

Armada Holdings Sdn Bhd CEO Datuk Wasi Khan is pictured at the Kuala Lumpur High Court December 11, 2019. — Picture by Firdaus Latif

Today, Ahmad Zahid insisted that the RM10 million to Armada was an investment which he said was returned to Yayasan Akalbudi, and that the sum of over RM69,000 was an interest payment on the return of investment which he said Yayasan Akalbudi was allowed to receive under both its original or amended company constitution.

Disagreeing that the RM10 million was actually a loan that he had given to Armada, Ahmad Zahid confirmed that Yayasan Akalbudi's company constitution does not allow it to give the money out as a loan.

Raja Rozela suggested that the RM69,000 interest was given to Yayasan Akalbudi out of Armada CEO Datuk Wasi Khan @ Wasiyu Zama Israr's own kindness, but Ahmad Zahid disagreed and said: "Yang Arif, it is not courtesy, but it is Yayasan Akalbudi's right as it should receive the return from the investment made. Let me explain, when the investment failed, the return of investment based on the investment of Armada's savings on the RM10 million, therefore the interest from that RM10 million deposit — when that investment did not succeed — was given back to Yayasan Akalbudi."

Asked to confirm that there was nothing agreed upon with Armada's Wasi and their mutual friend Datuk Seri Khalid Mohamad Jiwa on any repayment of the RM10 million along with the interest, Ahmad Zahid said there was no agreement and that what they had was a "verbal agreement".

Raja Rozela highlighted that Wasi had previously testified in this trial that he also gave the sum of over RM69,000 to Yayasan Akalbudi "because he got to know that you used RM10 million of the money for the poor and orphans, but Ahmad Zahid disagreed with this testimony.

Ahmad Zahid disagreed when Raja Rozela suggested that he had breached the objectives for Yayasan Akalbudi's formation as the RM10 million was given out as a loan and not as an investment, also disagreeing with the suggestion that he had misused money meant for the poor.

Yesterday, during cross-examination, Ahmad Zahid confirmed that he had checked Yayasan Akalbudi's balance first and ensured there were sufficient funds in the account before issuing the RM10 million cheque to Armada.

Asked about the formula for him to calculate the "return on investment" (ROI) that he repeatedly said was obtained from the purported RM10 million investment, Ahmad Zahid yesterday said that the first step was to carry out due diligence on Armada Holdings and secondly to see how much potential profits would be obtained from the investment, and that the ROI would then be made based on the company's profit earnings.

Ahmad Zahid yesterday said there was a proposal in the form of an executive summary given by Armada to him where it was said the ROI would be more than 20 per cent of the seed capital of the company which was planning to bid to be a coal supplier to a Tenaga Nasional Berhad subsidiary, but he no longer had this proposal in his keeping.

Agreeing that having RM10 million for its paid-up capital was a condition by TNB for companies like Armada wishing to register as a TNB contractor before it could bid for tenders, Ahmad Zahid yesterday said it was not within his knowledge that Armada actually had yet to be incorporated as a company when the RM10 million cheque by Yayasan Akalbudi was given.

When asked by Raja Rozela yesterday if Armada not having been incorporated yet at the time of the RM10 million cheque issuance meant that his due diligence was incomplete, Ahmad Zahid sought to explain that the due diligence was carried out on the proposal or its executive summary instead of on Armada.

Ahmad Zahid however ultimately agreed yesterday that this meant his due diligence was incomplete.

In this trial, Ahmad Zahid — who is also a former home minister and former deputy prime minister — is facing 47 charges, namely 12 counts of criminal breach of trust in relation to charitable foundation Yayasan Akalbudi’s funds, 27 counts of money-laundering, and eight counts of bribery charges.