1MDB took another loan despite RM32 billion debt, court told

cThe High Court was told yesterday that 1MDB took out another loan to complete the joint venture (JV) with Aabar Investment PJS despite having US$3 billion in issued bonds for the JV and debts of RM32 billion in 2014.

Former 1MDB CEO Shahrol Azral Ibrahim Halmi, who has been on the witness stand since late last year, said the sovereign wealth fund had no choice but to take out the loan as it was obliged to follow the instructions from the Prime Minister’s Office (PMO) to complete the JV before the visit of the Abu Dhabi crown prince.

Shahrol, 49, said this during cross-examination by lawyer Wan Aizuddin Wan Mohammed at Najib Razak’s RM2.3 billion 1MDB graft trial.

The buyback option was to redeem “Aabar Options” during the acquisition of independent power plants in 2012, as agreed between Aabar and 1MDB. The redemption was made through 1MDB subsidiary 1MDB Energy Holdings Ltd.

When asked how he knew the instruction came from the PMO, Shahrol said he had been passed talking points by fugitive businessman Low Taek Jho, better known as Jho Low.

“There was also an email from Najib’s principal private secretary, the late Azlin Alias, detailing the final form of the JV.”

Wan Aizuddin: The company was already billions of dollars in debt, but you took out another loan?

Shahrol: It was consistent with my instructions from the PMO and Jho Low to make it a done deal. It was not another loan, it was refinancing.

Wan Aizuddin: So you took out another loan to finance a loan? Was it at a lower rate?

Shahrol: It was called refinancing, and yes, ideally, at a lower rate.

Shahrol, the ninth prosecution witness, added that no approval was given by the 1MDB board for the utilisation of the US$3 billion bond raised by 1MDB to finance the development of the TRX project.

“There was no specific approval,” he said. “However, once, 1MDB chief financial officer Azmi Tahir updated the board, saying that the funds would be placed with a fund manager.”

Shahrol said the deal with Aabar was pushed through despite the debt because of Jho Low’s involvement.

Wan Aizuddin: You knowingly and actively participated in defrauding 1MDB by misleading the board, the (then) PM and the government of Malaysia.

Shahrol: I disagree.

He also disagreed with Wan Aizuddin’s suggestion that the embezzlement of funds from the US$3 billion bond was done with his full knowledge and in cahoots with Jho Low, his associates and 1MDB’s financial adviser, Goldman Sachs.

Najib, 67, faces four charges of using his position to obtain bribes totalling RM2.3 billion from 1MDB funds and 21 charges of money laundering involving the same amount.

The trial continues today before judge Collin Lawrence Sequerah.