This article first appeared in The Edge Financial Daily on November 6, 2019

KUALA LUMPUR: Datuk Shahrol Azral Ibrahim Halmi, former chief executive officer (CEO) of 1Malaysia Development Bhd (1MDB), said PetroSaudi International Ltd (PSI) has accumulated “around US$2.2 billion” in debt from the strategic development company as of 2015.

He said of the total, 1MDB had recovered “hundreds of millions” but could not confirm the exact amount.

“Some of them were repatriated in the low hundreds of millions. Majority of them were stuck in fund units. By that time, I had left (the) 1MDB management,” he added.

During the cross-examination, lead defence counsel Tan Sri Muhammad Shafee Abdullah asked Shahrol on the US$500 million loan from 1MDB to PSI, which was addressed to joint-venture (JV) company 1MDB-PetroSaudi Ltd, registered in the British Virgin Islands.

It is worth noting that at this point, 1MDB had already relinquished its equity stake in the JV company — initially valued at US$1 billion — as it had converted its shares into Murabaha notes under a financing scheme. However, the JV company still uses the name 1MDB-PetroSaudi.

After the disbursement of the loan, Shahrol revealed that PSI had only paid the first interest/profit payment back to 1MDB, amounting to about RM129 million in cash.

PSI never paid a single cent back to 1MDB from the second year onwards in accordance with the repayment structure based on the agreement.

Muhammad Shafee pointed out that there was no documentary evidence to show that there was a due diligence undertaken by 1MDB prior to signing the loan facility agreement for PSI, to which Shahrol agreed.

Muhammad Shafee went on to allude that Shahrol himself was involved in the conspiracy to hasten the agreement so that PSI, and by extension fugitive businessman Low Taek Jho (also known as Jho Low), would get the money as soon as possible.

Muhammad Shafee: Wasn’t there a due diligence before you signed (the loan facility agreement)?

Shahrol: I was satisfied at the time that the counterparty is solid. Yes, we have established that there were no documentary due diligence. But the representation that there was no due diligence done at all is incorrect.

Muhammad Shafee: Can I say to you that if there was a due diligence, it must have been reported.

Shahrol: We did the best we could with the information which we were given.

Muhammad Shafee: I’m putting it to you that you were aware when you signed this letter that there was no due diligence done.

Shahrol: I disagree.

Muhammad Shafee: But you had no documents to proof that due diligence was done.

Shahrol: Correct.

Muhammad Shafee: You signed this letter because you wanted to facilitate the sum of money to PSI as soon as possible.

Shahrol: Yes.

Muhammad Shafee: Why were you in such a hurry to send the money?

Shahrol: Because of the pressure that was put on me. Remember it was supposed to be July 19, then Aug 19, there was pressure from Jho Low to get this done.

Muhammad Shafee: I wouldn’t buy that you had that pressure on you. In this case here you are the kingmaker, you are the lender, and PSI is the borrower, how can they put pressure on you?

Shahrol: I believe at the time that this was a strategic relationship, because of the G2G, I was under pressure to facilitate this deal.

Muhammad Shafee: By signing this letter, I’m putting it to you that this is yet another evidence that you were in it together in the conspiracy to mislead 1MDB.

Or at minimum, you were reckless by not acting in the best interest of 1MDB.

Shahrol: I disagree.

Najib currently faces four charges of abuse of power and 21 counts of money laundering in relation to billions of ringgit allegedly sourced from 1MDB.