KUALA LUMPUR (April 12): Tan Sri Mohd Bakke Salleh testified that he was “suspicious” that former prime minister Datuk Seri Najib Abdul Razak was “involved in the scheme of things” in regards to 1Malaysia Development Bhd’s (1MDB) PetroSaudi joint venture (JV) in 2009, which eventually spiralled to burn a sum of US$1.53 billion in 1MDB’s coffers.
Bakke, who served as chairman of 1MDB’s board, told the High Court at the 1MDB audit tampering trial that he had not gone to see Najib about the deal because of his suspicions of Najib’s involvement.
Bakke was under cross-examination by lawyer Tan Sri Shafee Abdullah, who had asked him about 1MDB’s JV agreement with Saudi Arabia’s PetroSaudi International Ltd (PSI) in 2009.
In 2009, Najib and financier Low Taek Jho moved for 1MDB to enter into a 40:60 JV agreement with PSI, supposedly as a government-to-government initiative.
The JV company (JVCo), named 1MDB-PetroSaudi Ltd, involved 1MDB undertaking an equity investment of US$1 billion while PSI would inject US$1.5 billion worth of assets.
However, after the JV agreement was signed, PSI said its US$1.5 billion asset injection into the JVCo entailed a US$700 million advance for 1MDB, which meant 1MDB owed PSI.
Through the instructions of former 1MDB chief executive officer Datuk Shahrol Azral Ibrahim Halmi, 1MDB had diverted US$700 million from the US$1 billion JV equity investment into an account belonging to Good Star Ltd, on grounds that PSI said Good Star was its affiliate.
Bakke said previously that he had wanted to resign because of the way 1MDB management had done the deal to remit the US$700 million to a different entity in Good Star.
Shafee had asked him why he had not sought out Najib to tell him about this.
The lawyer pointed out that Bakke in 2009 was serving as FGV Holdings Bhd (then Felda Global Ventures Holdings Bhd) group president and CEO.
Because of his position in FGV, Bakke was in a position to meet with Najib every two weeks, according to Shafee. He then asked Bakke why he hadn’t told Najib about this at one of these meetings.
Shafee: You know you’re comfortable to see the prime minister anytime. Not for 1MDB but there is Felda, you see him every two weeks. You could’ve seen him and [told him about] 1MDB.
Bakke: It was not done because we already firmed up [the JV].
Shafee: At one point you [said] you felt sick, in fact you wanted to resign from the board. Before that did you see the prime minister and tell him why you’re resigning?
Bakke: I didn’t because I had feeling and suspicion that the prime minister was in the loop and involved in the scheme of things with PetroSaudi. I decided not to see him personally. The same feelings were shared by board members. One that confirmed our suspicion, which made us feel disgusted, was the way the US$1 billion was remitted.
Bakke then said that his suspicions arose from the way the deal was asked to be rushed despite the board having several misgivings and red flags surrounding the deals.
Last week, Bakke testified that he had feelings of discomfort to embark on the JV and that 1MDB's board of directors was also uneasy about it.
However, on Sept 26, 2009 before a board meeting to firm up the JV, Bakke said Jho Low had passed him the phone (belonging to Jho Low) to speak with Najib.
"Basically, Najib told me don't spend too much time looking at past transactions because the board was asking how we ended up with RM4.3 billion from the RM5 billion Islamic medium-term notes," he said.
On Tuesday (April 12), Shafee asked Bakke what other suspicions he had of Najib.
Shafee: The prime minister was interested in a government-to-government PSI deal, was there any more suspicion?
Bakke: I understand, but why the need to work in such a hurried fashion? That was the discomfort of me and the board.
Shafee: I’m just trying to understand why you never went to see the prime minister? What is it that you were suspicious of [the] prime minister? No need suspicion he was in on the deal. He liked the deal to be done.
Bakke: My suspicion was why to expedite this [deal] and position to do it in a hurried fashion? When you’re pressed to do something against a professional approach, then we (the board) have to ask why we have to do this?
Shafee then told him that Najib could not have possibly micromanaged 1MDB to do these sham deals and that the management of 1MDB is who Bakke should be suspicious of, as the management had duped the board and Najib.
Shafee: Aren’t you barking at the wrong tree? Why blame the prime minister when management were directly under you? Why would he (Najib) micromanage? He could not possibly micromanage.
Bakke: You have to look at [the] context of [the] entire project (the JV). If you look at a point in time, it’s specific. We were not pleased with what happened, my own conclusion is that if I did not attend to the phone call of the prime minister, the board wouldn’t have rushed through the deal. This is why my suspicions came. The manner in which instructions came. If only prime minister had not spoken to me and got Jho low to give me the phone, we would have looked at this as a proper proposal and done it properly.
Shafee: So what is it you were suspicious of the prime minister? Was he going to steal the money? What is it?
Bakke: The suspicion was as to why push something [the JV] without normal protocols. It would certainly create elements of doubt there. We asked why are we ready to listen or relax certain things. That was my suspicion.
Shafee: You were so suspicious that you didn’t want to see the prime minister?
Bakke: This feeling of being completely suspicious of what transpired was reinforced when we found out about the US$1 billion remittance.
Previously, Bakke had testified that he had texted Najib about the US$700 million to Good Star, however Najib did not reply.
As a result, he decided to resign in October 2009 from the board.
Bakke is the 13th prosecution witness in Najib and former 1MDB president Arul Kanda Kandasamy's audit tampering trial where both men are charged under Section 23(1) of the MACC Act 2009, which specifies a jail term of up to 20 years and a fine of no less than five times the amount of gratification or RM10,000, whichever is higher.
The trial is before High Court Justice Mohamad Zaini Mazlan.
Bakke on Tuesday also testified that the phone call with Najib was not recorded in meeting minutes as it was the consensus of the board after he briefed the board members of the conversation. He also said that the board decided not to include the conversation as it was linked to the then premier.
Shafee questioned Bakke on why the phone call was not recorded when it was relatively important in pushing the JV further.
"[The] phone call happened before commencement of the board meeting. [From the] conversation that took place, [the] points raised were shared with fellow board members.
"Now looking back at the meeting, maybe it would have been better for us to have [it] reflected in the meeting," Bakke answered, adding that the board thought that it was inappropriate to include it at that point in time.
Bakke: As the conversation happened before [the board meeting,] we deemed it not appropriate to reflect [on] the conversation with the [then] PM during the meeting.
Shafee: Why [would it be] not appropriate?
Bakke: Members of the board [decided that for] anything linked to the [then] PM, let's not put it in minutes or records and [as the] phone call came before the meeting, that was the consensus.
When pressed, Bakke maintained his stance and even quipped, "When you look back and trace everything ... with the benefit of hindsight ... I should not have even accepted to be on the board of 1MDB."