This article first appeared in The Edge Malaysia Weekly on November 11, 2019 - November 17, 2019

BANK Negara Malaysia enquired about US$700 million that was diverted to Good Star Ltd in August 2010 — almost a year after the diversion, the High Court heard during the 1MDB-Tanore trial last week.

The central bank appeared to have been satisfied with the explanation as, when 1MDB wanted to make four remittances in 2011 amounting to US$330 million —purportedly to 1MDB-PetroSaudi Ltd but in actual fact, it was to the RBS Coutts account of Good Star Ltd — it only asked the following in an email: How was 1MDB going to source US$330 million?; how would the US$330 million be utilised; and the expected benefits to Malaysia from the lending.

“Can you remember whether these were addressed?” Tan Sri Muhammad Shafee Abdullah, lead defence counsel for the accused, former prime minister Datuk Seri Najib Razak, asked prosecution witness Datuk Shahrol Azral Ibrahim Halmi.

“I don’t have specific recollection whether these were addressed. However, since the approval was given, it was probably addressed,” Shahrol said.

“Are you aware if these queries were given to the board?” Shafee asked.

“I am only aware (of it) today (Nov 7, 2019). I cannot testify whether this was communicated to 1MDB at that point in time,” Shahrol said.

Under payment instructions from PSI’s Patrick Mahony, 1MDB was to transfer the US$330 million in four tranches to mitigate the impact of forex conversion.

Shahrol verified that 1MDB transferred US$30 million to Good Star on May 20, 2011, followed by US$65 million on May 23, US$110 million on May 27, and US$125 million on Oct 25.

This was the second drawdown demand from PSI under a US$1.5 billion Murabahah Financing Agreement (MFA) arising from the termination of a joint venture (JV) with 1MDB, which had initially injected a capital sum of US$1 billion cash in September 2009 and given the first US$500 million drawdown in September 2010 to the former JV company, 1MDB-PetroSaudi.

The meeting between 1MDB and Bank Negara in August 2010 over the US$700 million diverted to Good Star was only revealed when Shafee brought up the minutes of the meeting.

Shahrol said he did not attend the meeting but knew it had to do with the US$700 million remitted to Good Star.

“When was the remittance?” Shafee asked. Shahrol replied, “Sept 30, 2009.”

Shahrol said 1MDB was then under the impression that Good Star was an affiliate of PSI. This belief appears to have continued for a number of years given that it also sent the second drawdown of US$330 million to Good Star in 2011, even though it was disguised as the JV company’s bank account.

“We weren’t in any investigative mode at that time,” Shahrol insisted.

Another reference to the central bank was made last week when Shafee raised an article in The Edge (Issue 1219, June 18, 2018), which featured an email exchange between PSI’s Tarek Obaid and Mahony dated Aug 7, 2010, discussing an upcoming meeting with “PM”: “The first tranche of $500m is ready to go but just pending Bank Negara approval. This approval could take 1-4 weeks. PM can push this to happen faster.”

Shafee asked Shahrol if he was aware who “PM” was in the email.

Shahrol said, “Most likely Datuk Seri Najib.”

Shafee then asked whether the witness agreed that there was a conspiracy to deceive Najib based on the fourth point in the email. “Based on point four, and only on point four, it does look like there was a conspiracy to deceive the prime minister,” Shahrol said.

Point four of the email is as follows: “On the $1b funding, the thing to tell the PM is that we have some very good investment prospects pending and that we really need the funds quickly. The constant broken promises and delays have hurt our business hugely and cost us (I think saying delays have cost us helps us because we can then blame them for the losses later). I wouldn’t discuss the $500m write-off with the PM or any losses at this point (this is Jho’s thoughts only for now but it makes sense) because I think the PM thinks we are making good investments. So I think we promote the JV and all the great things we can do with it but make it clear we need the funds soon and that delays are costing us — therefore we would urge the PM to do everything in his power to make sure we have the full $1b as soon as possible.”

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