This article first appeared in The Edge Malaysia Weekly on March 1, 2021 - March 7, 2021

WHEN Mohd Hazem Abdul Rahman left 1Malaysia Development Bhd (1MDB) in 2015 after only serving two years as its CEO, he was accorded a bonus of RM2.725 million — a generous amount, he acknowledged, given that he had mostly been kept out of the loop on important matters and had not been expected to take the lead in managing major deals.

In fact, he and his predecessor Datuk Shahrol Azral Ibrahim Halmi — and even 1MDB chairman Tan Sri Lodin Wok Kamaruddin — had been expected to function more as figureheads, Hazem testified recently during the 1MDB-Tanore trial.

He had previously admitted that he was appointed to replace Shahrol — who claimed he was transferred out of 1MDB to another government entity because he had started to ask “too many questions” — as he was perceived to be a “loyalist” who would obey instructions.

Hazem admitted, despite being aware of possible elements of criminal wrongdoing in 1MDB, that he abided by instructions given by financier Low Taek Jho and never raised those issues to the board of directors as he was fearful of then prime minister Datuk Seri Najib Razak. Moreover, he believed Najib was in agreement with Low's instructions.

Why did Hazem not check with Najib on Low's instructions? Could the former premier be so terrifying that he had paid Hazem a handsome bonus of RM2.725 million when he left 1MDB? asked lead defence counsel Tan Sri Muhammad Shafee Abdullah.

“Does that sound like a PM who would persecute you? He could have easily said, let this rascal (sic) Hazem get lost without any payment. But he paid you RM2.725 million,” Shafee said, to which Hazem agreed.

Hazem pointed out that Low did not even exist in the eyes of the 1MDB board of directors, as his name was not recorded in the minutes of board meetings. Any and all instructions from Low were officially referred to as instructions from the Prime Minister’s Office (PMO), he said.

Moreover, he pointed out that, ultimately, when a proposed transaction required the approval of the shareholder — in this case, Najib as the corporate representative of the Ministry of Finance Inc — Najib would sign off on it.

The US$3 billion bond issuance for the development of the Tun Razak Exchange (TRX) joint venture (JV) was one such instance, said Hazem under cross-examination on the project a fortnight ago.

Hazem told the court that he did not keep tabs on the fundraising exercise by 1MDB for the development of the TRX, which was to be undertaken with Aabar Investment PJS Ltd (Aabar BVI).

However, his predecessor Shahrol claimed in his 270-page witness statement that he handed over the responsibility of managing the fundraising exercise to Hazem because the TRX project was under the latter’s responsibility as chief operating officer of 1MDB. Moreover, Hazem was also set to replace him as CEO.

Hazem told the court that the US$3 billion bond arrangement with Goldman Sachs for the funding of TRX was orchestrated by Low with the assistance of 1MDB’s general counsel Jasmine Loo and then chief investment officer Terence Geh.

Hazem claimed he was never asked to attend any meetings or involved in any of the negotiations leading to the issuance of the bonds arranged by Goldman Sachs. Neither was he involved in the obtaining of a letter of support from the government for the bond issuance as it was handled by Loo and Geh. Although he was their superior, both executives did not brief him, he said, nor had he asked them for any information.

The US$3 billion bond issuance was to pay for 1MDB’s share in the 50:50 JV with Aabar BVI in 2013 for the development of the TRX project. Abu Dhabi’s International Petroleum Investment Company (IPIC) was to guarantee Aabar BVI’s US$3 billion investment, while Malaysia’s Ministry of Finance guaranteed 1MDB’s investment by way of a letter of support.

But the JV never got off the ground and it was later discovered to be nothing but a scam. Aabar BVI never injected its promised share of a US$3 billion investment and the US$3 billion 1MDB injected into it was alleged to have been siphoned off by Low, Najib and others.

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