KUALA LUMPUR (Oct 31): The cross-examination of former 1Malaysia Development Bhd (1MDB) chief executive officer Datuk Shahrol Azral Ibrahim Halmi will continue today as the defence team is expected to scrutinise the Murabaha financing scheme pertaining to 1MDB's joint venture (JV) with PetroSaudi International Ltd (PSI).
The trial is scheduled to start at 2.30pm before High Court Justice Collin Lawrence Sequerah, as lead defence counsel Tan Sri Muhammad Shafee Abdullah has to attend to other matters at the Federal Court in the morning.
Yesterday, it was revealed that 1MDB had to fork out another US$1.5 billion to participate in the JV's Murabaha financing scheme, on top of the initial US$1 billion cash it had invested into the JV.
It was noted that the idea of converting the shares to Murabaha notes in 2010 came from missing businessman Low Taek Jho and former 1MDB executive director Casey Tang Keng Chee.
Shafee had said the arrangement was either an "idiotic decision" on Shahrol's part, or an elaborate plan by the conspirators to cheat 1MDB.
Shahrol, however, maintained that he did not find the transaction suspicious, or odd, to say the least, at the time the arrangement was mooted.
He said the job of converting the shares in PetroSaudi Holdings (Cayman) Ltd — the JV — into Murabaha notes in 2010 was tasked to then 1MDB chief investment officer, Nik Faisal Ariff Kamil.
Nik Faisal was also CEO of SRC International Sdn Bhd, a former subsidiary of 1MDB and a central subject of former prime minister Datuk Seri Najib Razak's first graft trial involving RM42 million.
"I felt I had no choice but to execute (it) as this is something important to the country. I felt it was part of something bigger to the country and good between PetroSaudi and 1MDB.
"Then I did not question as I looked at it as a bigger strategic arrangement between G to G (government to government). That is why I did not think that (having 1MDB fork out another US$1.5 billion) was an odd arrangement. Now seeing it, it doesn't make sense," Shahrol said yesterday.
The initial arrangement executed in 2009 was that 1MDB would inject US$1 billion in cash while PSI would contribute US$1.5 billion in assets for a 60:40 equity ratio in the JV.
It was later revealed that the assets were extremely overvalued, and did not even belonged to PSI to begin with.
In the 1MDB-Tanore trial, Najib faces four charges for using his position to obtain bribes totalling RM2.3 billion from 1MDB funds and 21 charges of money laundering involving RM4.3 billion.
Also fixed for hearing today is the ex-premier's application to get documents from former PSI executive Xavier Justo, who was a whistleblower in the case.
The Edge is reporting the proceedings of the 1MDB-Tanore trial live.