KUALA LUMPUR (June 21): A former managing director at Deutsche Bank (M) Bhd told the High Court that 1MDB in 2009 wanted the bank to accelerate a US$1 billion remittance for a 40% stake in a joint venture company (JVCo) known as 1MDB PetroSaudi Ltd because then prime minister Datuk Seri Najib Tun Razak wanted to make a press statement on the JV.

Jacqueline Ho Yek Wan, who was testifying at the 1MDB-Tanore trial before Justice Datuk Collin Lawrence Sequerah, said that for this transaction, she was dealing primarily with former 1MDB director of business development Casey Tang Keng Chee, who had asked her to execute the fund transfer fast even though 1MDB had changed the recipients of the funds.

“Casey Tang continued to persistently press upon Deutsche Bank again, that Deutsche Bank needed to speed up the money transfer process as the then prime minister, Datuk Seri Najib Tun Razak, wanted to make a press statement on the 1MDB joint venture project with PetroSaudi International Ltd,” she said.

Ho testified that before Deutsche Bank made the transaction, she had asked former 1MDB chief executive officer (CEO) Datuk Shahrol Azral Ibrahim Halmi to obtain permission from Bank Negara Malaysia (BNM) for the US$1 billion transaction as it was required under the Malaysia’s Foreign Exchange Administration Regulations for any transaction of RM100 million and above.

She then testified that on Sept 29, 2009, she had received a letter from 1MDB with BNM’s written approval and a certified extract of board resolution of 1MDB.

BNM had given approval for 1MDB to remit US$1 billion to acquire a 40% stake in 1MDB PetroSaudi, British Virgin Islands.

She said the letter stated that the funds were to go to an account belonging to 1MDB PetroSaudi with Banca Della Svizzera Italiana SA (BSI).

She also verified that the certified extract of 1MDB’s board minutes had authorised and approved this transaction for the JV which was dated Sept 26, 2009.

However, on Sept 30, the day the transaction was to be remitted into the BSI account, Ho said Deutsche received a remittance instruction from 1MDB Treasury executive Stephenny Chow that the US$1 billion remittance will be made in two separate transactions and further informed that the US$1 billion will not be remitted to the BSI account as per 1MDB's prior authorisation request to BNM.

Ho testified that the instructions said the money had to be transferred in two tranches to two different accounts, US$300 million to a J.P. Morgan SA account and the US$700 million to an RBS Coutts Bank Ltd account.

Reading from her witness statement, Ho said the remittance instruction did not have the name of the beneficiary of the two transfers and upon query, she was told by 1MDB that the name of the beneficiaries should not be in the remittance instruction.

“I then called Casey to ask for the name of the beneficiary and he informed me that it's 1MDB PetroSaudi for both transfers… I then called Stephenny Chow to request for 1MDB to add 1MDB PetroSaudi’s name as the beneficiary in the remittance instruction. Following this, I received an email from Stephenny Chow informing me that the beneficiaries for the transfers are 1MDB PetroSaudi for the sum of US$300 million and PetroSaudi International Ltd for the sum of US$700 million. Stephenny Chow, however, informed me that the name of the beneficiaries should not be included in the remittance instruction,” Ho said.

She said that because 1MDB had changed the beneficiaries, they had to get another approval from BNM with the changed beneficiaries from BSI to J.P. Morgan and RBS Coutts, as it was required by Deutsche for the remittance.

“Casey Tang came to Deutsche (Bank)’s office and presented us with a letter from BNM confirming that the transfers will be made to two different accounts in J.P. Morgan and RBS Coutts,” she said.

She also said Deutsche Bank had called BNM to confirm if this was true and testified that BNM had no issues with the money going to the two entities.

After that, she said Tang kept asking her to speed up the transactions.

“As such, we were urged to accelerate the US$1 billion remittance process into those two accounts,” she said.

Deutsche had remitted the money on Sept 30, 2009. On Oct 2, 2009, RBS Coutts had contacted Deutsche Bank to ask for the name of the recipient of the funds. Ho said she contacted Shahrol and he told her that the name was a certain Good Star Ltd, which was a different name to what Chow had given them previously.

“I then asked Shahrol why the name of the beneficiary is different from the name 1MDB had provided to Deutsche on Sept 30, 2009. Shahrol informed me that Good Star Ltd is a wholly-owned subsidiary of PetroSaudi International Ltd and they wanted the funds transferred directly to their subsidiary,” she said.

The JV turned out to be a sham and Good Star was a company that was actually linked to fugitive financier Low Taek Jho, or Jho Low, who made off with the US$700 million.

Because of these transfers, 1MDB had sued Deutsche Bank as part of six suits worth US$1.83 billion against several foreign banks.

1MDB’s claim against Deutsche Bank, RBS Coutts and JP Morgan Ltd in Geneva alleges that the financial institutions did not practise due diligence, resulting in fraudulent transfers between 2009 and end-2011 that led to losses for 1MDB.

Deutsche Bank, in its defence filed last year denied that it had not practised due diligence in the transfer of the funds.

It also denied the assertion made in 1MDB’s statement of claim (SOC) that 1MDB held a current account at the bank. It claimed its involvement was having a transfer of foreign funds facility.

The bank further claimed that it had taken screening measures to prevent money laundering or anti-terrorism financing.

“The screening did not disclose any negative results with regard to the JVCo (1MDB PetroSaudi), PetroSaudi or any PetroSaudi entities. As such, Deutsche Bank is under no obligation to carry out a further review under the relevant regulatory guidelines applicable at the material time,” it said.

“Deutsche Bank has also conducted inquiries and due diligence to ascertain the identity and purpose of the US$700 million transfer.”

The bank noted that at all times, it followed Shahrol and Tang’s instructions regarding the purported transfer, and that it was accompanied by BNM letters dated Sept 29 and 30, 2009, to two different accounts: one in Coutts and the other in JP Morgan.

“Deutsche Bank also avers that as [Shahrol and Tang] are agents of 1MDB, their knowledge of the true nature of 1MDB’s remittance instructions of 2009 was attributed to or imputed on 1MDB as the principal.”

In the opening statement of the trial in 2019 by lead prosecutor Datuk Seri Gopal Sri Ram, he said they will show that Najib had received US$20 million in two tranches into his personal accounts from the US$700 million from Jho Low.

The Edge is covering the trial live here.

Users of The Edge Markets app may tap here to access the live report.