KUALA LUMPUR (May 19): 1Malaysia Development Bhd's (1MDB) former chairman Tan Sri Mohd Bakke Salleh told the High Court on Thursday that he did not complain to the Ministry of Finance (MoF) and then former prime minister Datuk Seri Najib Razak about the financial mismanagement of 1MDB because it would seem like he was complaining about Najib.
Testifying at the 1MDB-Tanore trial before Justice Datuk Collin Lawrence Sequerah in which Najib is the only accused, Bakke however revealed that he should have gone to report these issues to the MoF (where Najib was the minister at the time) and also to Najib himself as the then prime minister.
It should be noted that as the Minister of Finance Inc was the sole shareholder of 1MDB, Najib in his capacity as finance minister was the representative shareholder. Najib also was the chairman of the board of advisers.
Under re-examination from lead prosecutor Datuk Seri Gopal Sri Ram, he was asked why he did not report about his misgivings.
Sri Ram: You could have complained to the Ministry of Finance and the prime minister about what happened. You could have and you did not. Why did you not?
Bakke: [It would have felt like] I was complaining about the prime minister.
Sri Ram was then prompted to quip: "It was like complaining of the loss of sheep to the wolf."
Bakke: I was uncomfortable when management split the remittance (US$1 billion from the 1MDB-PSI joint venture [JV] which was split and US$700 million ended up in Good Star Ltd controlled by fugitive financier Low Taek Jho or Jho Low) and that was the trigger which prompted me to resign from the board. To go back and tell the prime minister, it was saying to him that I had suspicion on you… Looking at its entirety, I should've done that whether it was the prime minister or not. I should've been prepared to do that (complain). Maybe I should have done so, [be] bold enough to say, whether PM or not, I'm ready to stick out my neck.
To recap, in 2009, Najib and Jho Low moved for 1MDB to enter into a 40:60 JV agreement with PSI, purportedly as a government-to-government initiative.
The JV company, 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 JV company 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.
The money was then siphoned off by Jho Low to pay bribes and kickbacks to many overseas and local officials including Najib.
Bakke said previously that he had wanted to resign because of the way the 1MDB management had remitted the US$700 million to Good Star rather than as instructed by the board.
Bakke, along with board member Tan Sri Azlan Mohd Zainol, resigned in protest over the remittance of the funds. Bakke left on Oct 19, 2009, and Azlan about three months later on Jan 11, 2010.
Bakke served just seven weeks on 1MDB board.
Earlier, Najib's lawyer Tan Sri Muhammad Shafee Abdullah, during cross-examination of the witness, alleged that Bakke had "taken the easy way out" by resigning to which Bakke disagreed.
Shafee: You took the easy way out by resigning instead of resolving the controversies?
Bakke: I disagree.
Shafee then put it to Bakke that he could have lodged a formal complaint with the MoF about the irregularities.
Shafee: You could have expressed all your frustration and finding of facts... send this complaint officially given to the PM but you chose not to do it after all. If you had done that, these issues would not have culminated, correct?
Bakke: No.
Bakke added that the responsibility did not fall solely on his shoulders but also also others on the board.
Shafee: You could've given the PM a report and said 'this is what I'm unhappy about'. You could've done that.
Bakke: Yes. I could've done that.
Shafee: You agree with me if you had done that these issues in this case would not have gone this far.
Bakke: No, there was also new board chairman to attend to this.
In the 1MDB-Tanore trial, Najib is charged with four counts of abuse of power in enriching himself with RM2.3 billion of 1MDB funds and 21 counts of money laundering of the same amount. He could face a fine and up to 20 years' imprisonment if convicted.
Bakke was released from the stand and the trial will continue on June 7.
The Edge is covering the trial live here.
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