This article first appeared in The Edge Financial Daily on November 7, 2019

KUALA LUMPUR: The defence in Datuk Seri Najib Razak’s 1Malaysia Development Bhd-Tanore (1MDB-Tanore) trial have argued that there may have been a conspiracy by PetroSaudi International Ltd (PSI) executives Tarek Obaid and Patrick Mahony to ensure that the former prime minister would expedite the release of US$1 billion to their company.

This was brought up by lead defence counsel Tan Sri Muhammad Shafee Abdullah, referring to an article by The Edge Malaysia weekly dated June 18-24, 2018, which carried an email exchange between Tarek and Mahony dated Aug 7, 2010.

The lawyer read out the contents of the email in court yesterday and tried to verify them with prosecution witness Datuk Shahrol Azral Ibrahim Halmi.

However, the former chief executive officer of 1MDB said he was not comfortable commenting on the email as he was not involved in what the PSI executives were doing.

Judge Collin Lawrence Sequerah also stepped in and questioned the relevance of verifying the email content with Shahrol.

“The witness is not privy to all these,” he said.

Nonetheless, Muhammad Shafee requested to ask a final question about the fourth paragraph of the email, covering Tarek and Mahony’s plan to convince Najib to accelerate the loan disbursement from 1MDB to PSI in 2010.

“Do you agree that based on point four, there is a conspiracy to deceive the prime minister,” he asked Shahrol.

"Based on point four, and only on point four, it does look like there was a conspiracy to deceive the prime minister,” Shahrol replied.

Point four of the email states:

“On the US$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 US$500 million 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 (joint venture) 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 US$1b as soon as possible.”

Prior to this, Muhammad Shafee asked Shahrol whether he was able to tell the identity of the “PM” mentioned in the email, to which the witness said it was “most likely Datuk Seri Najib”.

The email was written after the failed JV between 1MDB and PSI, in which US$700 million of cash capital from the Malaysian funds was being diverted to Good Star Ltd, a unit linked to fugitive businessman Low Taek Jho (Jho Low), and Tarek and Mahony were proposing 1MDB to inject more money for an investment in French-based GDF Suez.

1MDB subsequently sent US$830 million to PSI as an extension of the existing US$1.2 billion Islamic loan paper facility (Murabaha Note), instead of a direct investment in GDF Suez for a 4.23% stake, at a 20% discount of the market price.

Documents were also brought up showing that fugitive financier Jho Low and Tarek had provided different reasons to their respective banks for transfers of a total of 91 million Swiss francs from PSI to Good Star in 2010 after the termination of the JV with PSI.

Tarek had told JPMorgan that the transfer was to participate in an investment in Dar Al Arkan with “wealthy Saudi families”.

However, Jho Low told RBS Coutts, where Good Star has an account, that the incoming funds from Tarek were for “repayment of a loan/investment based on an investment management agreement (private equity)”.

Shahrol said he had not seen nor shown these documents before.

Nonetheless, Shahrol said he did not see any commonality between their reasons. After being shown Tarek’s bank statement in 2010, Shahrol also revealed that Tarek had once paid “11,400 dollars” for Starbucks coffee, although he did not mention the currency.

“That was very high [for coffee],” the witness joked. Muhammad Shafee agreed, and commented that the price Tarek paid did not commensurate with the product quality.