KUALA LUMPUR (Sept 2): A sum of US$699.32 million was embezzled from 1MDB Energy Holdings Ltd in 2014 and transferred to a second fake Aabar firm that was incorporated in the Seychelles, the High Court heard today.

Previously, it was revealed that master conspirator Jho Low had incorporated Aabar Investments PJS Ltd in the British Virgin Islands to mirror the subsidiary of International Petroleum International Co (IPIC). The real subsidiary of IPIC is Aabar Investments PJS, without "Ltd".

Disclosing the purported existence of Aabar (Seychelles) at the 1MDB-Tanore trial today, defence counsel Wan Aizuddin Wan Mohammed said the US$699.32 million was transferred to this fake Aabar firm in two tranches in 2014.

The money was allegedly part of the US$975 million loan that 1MDB Energy obtained from Deutsche Bank that year.

The loan sum was initially intended to be paid to the real Aabar for the options that were given as alleged part consideration for IPIC's guarantee for the notes that raised US$3.5 billion, forming part of the funds raised in 2012 for a joint venture exercise.

Cross-examined by Wan Aizuddin, former 1MDB chief executive officer (CEO) Datuk Shahrol Azral Ibrahim Halmi, who was then one of the directors of 1MDB, said the board of directors was never briefed about the transfer of money to Aabar (Seychelles).

Wan Aizuddin: Was there any approval by the board of directors sought for this transfer?

Shahrol: No.

Shahrol said he in fact was not aware of this second fake Aabar.

It was also revealed in court today that the US$975 million loan from Deutsche Bank was never used to pay back the Aabar options. However, Wan Aizuddin pointed out that according to the minutes of a board meeting, then 1MDB CEO Mohd Hazem Abdul Rahman represented to the board that the funds were utilised to pay back the Aabar options.

When pressed on why the company had decided to take up the loan in the first place, Shahrol contended that the direction of the refinancing scheme was discussed between the management and then prime minister Datuk Seri Najib Razak and the directors only went along with the direction.

"A lot of the details and decisions with regard to the Aabar options were done at the PMO (Prime Minister's Office) level already, so we just went along with it," Shahrol said.

Wan Aizuddin: You would agree with me that surely the shareholders and the chairman of the board of advisers (referring to Najib) would only agree to what was proposed by the management.

Shahrol: I cannot comment as I have no knowledge of the discussion between the management and the chairman of the board of advisers.

On trial is Najib, who is facing four counts of abuse of power for using his position as prime minister, finance minister and 1MDB board of advisers' chairman to receive gratification worth RM2.28 billion.

Najib also faces 21 counts of money laundering involving over RM4.3 billion.

The trial before Justice Collin Lawrence Sequerah continues tomorrow.

Edited by S Kanagaraju

The Edge is covering the trial live here.

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