Fund’s $1.36b JV with PetroSaudi ‘a failure’

A joint venture (JV) between state fund 1Malaysia Development Berhad (1MDB) and PetroSaudi International (PSI), which was set up in 2009 with more than US$1 billion (S$1.36 billion) capital injection, was a failure, the Kuala Lumpur High Court heard yesterday.

Former 1MDB chief executive officer Shahrol Azral Ibrahim Halmi admitted this during cross-examination at the corruption trial of former prime minister Najib Razak involving RM2.28 billion (S$742 million) of 1MDB funds.

During questioning by Najib’s lead counsel Muhammad Shafee Abdullah, the key witness was referred to a document relating to a 1MDB board of directors meeting on July 5, 2010.

Mr Shafee asked: Do you agree that the 1MDB-PSI JV with the ratio of 40:60 per cent was a failure?

Datuk Shahrol replied: Agreed.

According to the JV’s strategic investment agreement, PSI held 60 per cent of the share, with the remaining 40 per cent held by 1MDB. The court had earlier heard that 1MDB injected US$1 billion, while PSI pumped in only US$108 million for their respective stakes.

Najib faces 25 charges – four for abuse of power that allegedly brought him financial benefit to the tune of RM2.3 billion; and 21 for money laundering involving the same amount of money.

He has consistently denied wrongdoing and his lawyers say he was misled by high-ranked officials at the fund.

The former premier faces imprisonment of up to 20 years and a fine of up to five times the sum or value of the gratification if found guilty.

On Monday, the court was told that most of the funds raised by 1MDB, which were intended for the development of Kuala Lumpur International Financial District known as Tun Razak Exchange and Bandar Malaysia, were pumped into PSI instead.

Bandar Malaysia is a mega project located at the former Sungai Besi airport site.

Meanwhile, Malaysia is working to locate at least US$4.3 billion in assets yet to be accounted for in a global money laundering probe into 1MDB, its anti-corruption chief said yesterday.

The US authorities say about US$4.5 billion was siphoned from 1MDB in a scandal spanning several countries but Malaysian officials say much more was stolen.

The US struck a deal last week to recover about US$700 million more from fugitive financier Low Taek Jho, who played a central role in the scandal. He had previously forfeited a US$126 million yacht and US$140 million in other assets.

But about RM18 billion in assets remain unidentified and Malaysia was working with at least five countries to recover the amount, Ms Latheefa Koya, the head of Malaysia’s Anti-Corruption Commission, told reporters.

“This what we’re working on… to locate, investigate and research where these properties are,” Ms Latheefa said. She declined to give further details on the assets sought or the countries involved, citing pending investigations.

At least six countries, including Singapore and Switzerland, are investigating alleged corruption and money laundering at 1MDB, founded by Najib.

Malaysia estimates that Low, also known as Jho Low, stole more than US$10 billion from 1MDB, Attorney-General Tommy Thomas told the Nikkei Asian Review last month.

Low, who faces charges in Malaysia and the US over the scandal, has consistently denied any wrongdoing.

The Straits Times | November 6th, 2019