‘Signing ceremony for 1MDB-PSI JV never happened’

This article first appeared in The Edge Financial Daily, on October 22, 2019.

Shahrol says he took it in good faith that there were probably factors he was unaware of that made the big signing ceremony not happen. Photo by Mohd Izwan Mohd Nazam

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KUALA LUMPUR: The signing ceremony between Malaysia and Saudi Arabia’s heads of state for a US$2.5 billion joint venture (JV) involving 1Malaysia Development Bhd (1MDB) and PetroSaudi International Ltd (PSI) never happened, despite it being the reason the deal was hastily done in the first place.

Lead defence counsel Tan Sri Muhammad Shafee Abdullah grilled the prosecution’s ninth witness and former 1MDB chief executive officer (CEO) Datuk Shahrol Azral Ibrahim Halmi yesterday over his decision to proceed with the JV despite the board’s directions to initiate an independent valuation of PSI’s assets.

According to a document produced by Muhammad Shafee, the board had directed Shahrol to proceed with the negotiation — not with the conclusion — of the proposed JV with PSI on the condition that an independent valuer be appointed by 1MDB but paid for by the JV company to value the JV company’s assets. However, the independent valuation was not done.

Shahrol, 1MDB CEO from 2009 to 2013, claimed he was under pressure to execute the deal within a tight deadline as he understood at the time that the PSI-1MDB collaboration was a high-level government-to-government initiative and also then prime minister Datuk Seri Najib Razak’s desire.

This understanding, Shahrol claimed, was relayed to him by purported mastermind Low Taek Jho (Jho Low).

Muhammad Shafee: When did you know the heads of government were not attending to sign?

Shahrol: A day earlier (Sept 27, 2009).

Muhammad Shafee: You should’ve known reasonably ahead of time. You agree with me [that] if Datuk Seri Najib could not make it, he would have given you ample time.

Shahrol: Yeah, but I was not in the PMO (Prime Minister’s Office), so I wasn’t in charge of his calendar.

Muhammad Shafee: But you would know whether he was attending or not. Aren’t you interested? This was a big day for you. You mean only on the 28th itself, you knew he was not attending?

Shahrol: I was informed by Jho Low to get this done on the 28th, because he said the heads of states will come. There was no information to the contrary until [it was] very close to the date, which was on the 27th or 28th. That was what happened.

Muhammad Shafee: Where was this agreement signed?

Shahrol: I signed my part in my office in KL (Kuala Lumpur), and Tarek [Obaid, the CEO of PSI] actually signed it somewhere [else] but not here.

Muhammad Shafee: So, all this pomp and ceremony didn’t happen. It was just signed by two humble CEOs in their respective offices.

Shahrol: Yes.

Muhammad Shafee: So there was no hurry?

Shahrol: There was a hurry in terms of that the reason for the hurry...

Muhammad Shafee: (cuts off) I’m putting this to you, that this Jho Low character hurried this all for nothing. He just wanted to speed up things, so he got what he wanted. Because the ceremony didn’t happen after all. Didn’t it occur to you?

Shahrol: At that time, no. At that time, I took it in good faith that there were probably factors I was not aware of that made this big signing ceremony not happen.

Eventually, the speedy JV deal was signed by Shahrol and Tarek on Sept 28, 2009, only a month after it was first proposed in an Aug 28, 2009 letter from Tarek to Najib.

Worse still, Shahrol admitted last week that he signed the JV agreement with PetroSaudi Holdings (Cayman) Ltd, instead of PSI. Take note that PetroSaudi Holdings (Cayman) is a different company altogether from PetroSaudi International.

1MDB invested US$1 billion in the JV. Najib, 66, faces four charges of using his position to obtain a bribe of RM2.28 billion from 1MDB and 21 charges of money laundering involving the same sum.

The hearing before Justice Collin Lawrence Sequerah will continue tentatively on Thursday.