Jho Low introduces PetroSaudi to 1MDB

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KUALA LUMPUR (April 9): Former 1Malaysia Development Bhd (1MDB) chief executive officer Datuk Shahrol Azral Ibrahim Halmi confirmed that Low Taek Jho introduced PetroSaudi Ltd’s executive Tarek Obaid to him. 

Shahrol Azral also confirmed that Low, or Jho Low who well known for splashing money for luxurious lifestyle, sat in the board meeting of 1MDB when deciding on the joint venture of PetroSaudi, according to the proceeding notes of the Public Accounts Committee’s report on the strategic investment fund.

This confirmed the report by The Edge Weekly that Low was involved in 1MDB’s joint venture with the PetroSaudi International. 

This was stated at the Parliament's hansard on the minutes of PAC proceedings in which several parties were called to testify. They include Shahrol Azral, Ministry of Finance officers, auditors Ernst & Young, KPMG, Deloitte Malaysia, and former 1MDB chairman Tan Sri Mohd Bakke Salleh. The minutes of PAC proceedings are now available on PAC’s official website.
 
1MDB’s joint venture (JV) with PetroSaudi is one of the highlights in the investigation. The signing of JV agreement was witnessed by Prime Minister Datuk Sri Najib Tun Razak and Prince Turki Abdullah. This was the first business venture by 1MDB. 

Under the JV agreement, 1MDB was to invest US$1 billion cash for a 40% equity stake, while PetroSaudi Holdings (Cayman) Ltd will contribute asset no worth less than US$1.5 billion for the remaining 60% stake. 

The JV, called 1MDB-PetroSaudi Ltd, was formed on Sept 18, 2009 -- the same day PetroSaudi (Cayman) was registered. Under the JV agreement, a clause says that 1MDB-PetroSaudi has received cash advances of US$700 million, one week after the JV was formed, from PetroSaudi (Cayman) on Sept 25. The sum needed to be repaid US$700 million cash advances in full on Sept 30 -- barely five days after the JV received the sum. 

The PAC raised question on the existence of the five-day cash advances by PetroSaudi (Cayman). There is no document shows that 1MDB’s board had been notified of the US$700 million cash advances when the JV was formed.  
 
According to the hansard of the proceeding on Nov 25, 2015, Shahrol Azral acknowledged that Low has introduced him to Tarek. However, he noted apart from being the advisor for Terengganu Investment Authority (TIA) until May 2009, Low had no further role since then. 
 
This is the first proceeding after Datuk Hasan Ariffin took over as the PAC chairman.
 
“At that time, as I remember, he was asked by PetroSaudi to ... I think the Board invited Prince Turki, but Prince Turki sends his apology and asked Mr. Low Taek Jho to go and represented and answered any questions but I do not believe Low Taek Jho stay for the deliberation for the entire meeting,” he told the PAC.
 
However, Shahrol said that he did not think Low was given the power to decide “Yes” or “No”, ‘I think we was asked to be there to just answer any questions.”
 
Shahrol said that he did not remember exactly when he actually met the officials from the PetroSaudi following the letter dated August 29, 2009 from the Prince Turkey to the Prime Minister Datuk Seri Najib Razak.
 
He also could not recall whether the first board meeting on PetroSaudi was held on Sept 18,2009.
 
“I also don’t recall but I recall a lot of emails of flying back and forth on the deal.” He told the PAC.
 
He said that after the management got the letter from the Prince Turkey, they immediately contact Patrick Mahony, PetroSaudi International’s chief executive officer and some of the people at the working level.
 
“So, when we got the letter, we immediately contacted, got in touch with I think that time it was,siapa ya? Patrick I think. Some of the working level people,” he said.
 
Further, the 1MDB management has engaged with its legal counsel to prepare the draft of agreement minus the commercial terms. Shahrol said the 1MDB had worked together with the counterpart in PetroSaudi to discuss the commercial agreements that went back and forth a number of times before it got a draft that was actually tabled to the Board on the Sept 18 board meeting.

In a damning report, PAC said there were proof that 1MDB ex-CEO, Shahrol, and management had repeatedly ignored strict and specific instruction of the board and disregard corporate governance guideline. 

The disregarded instructions included the appointment of consultant to evaluate the PetroSaudi JV. 

The full transcript of the PAC hearing is available at  http://www.parlimen.gov.my/pac/hansard-pac-list.html