Wednesday, May 18, 2022

Najib didn’t give green light on US$2.3 billion promissory notes, ex-1MDB director tells court

Former 1MDB non-executive director Ismee Ismail also agrees that the promissory notes were never shown to the board of directors.

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The Kuala Lumpur High Court was today told that Najib Razak never gave his approval to the 1MDB management to convert the company’s Petro Saudi International (PSI) investment into promissory notes purportedly worth US$2.3 billion.

Former 1MDB non-executive director Ismee Ismail, 58, said this during cross-examination by Najib’s lead counsel Muhammad Shafee Abdullah in the former prime minister’s trial for the misappropriation of RM2.3 billion in funds from 1MDB.

Shafee: You know the reason why I asked you this is because it goes to the heart of our defence. Did you see somewhere the fingerprints of my client (Najib)? With the way what was being done, the management purposely mishandled these funds. Did you see the fingerprints of my client?

Ismee: No.

Shafee: Is it ridiculous for the management to accept the promissory notes without collateral?

Ismee: Yes.

The 13th prosecution witness also agreed that the promissory notes were never shown to the 1MDB board of directors.

When asked about his understanding of promissory notes, Ismee said: “It is something like ‘I promise to pay’.”

He also testified that the fund’s management seemed to be acting on the instructions of fugitive businessman Low Taek Jho or Jho Low.

Previously, the court was told that 1MDB paid US$1 billion in 2009 for a 40% stake in the joint venture while PSI held the remaining 60%. The funds were later converted into Islamic murabahah notes.

1MDB subsequently paid another US$830 million between 2010 and 2011 for the same purpose. By 2012, the notes were said to be worth US$2.22 billion.

Shafee also asked the witness about 1MDB’s 2013 financial report that was supposed to be concluded by KPMG but which the audit firm was unable to do even after a year of meeting with the state fund.

Ismee said this was due to KPMG’s dissatisfaction with the documents and answers given by the 1MDB management to the audit company pertaining to 1MDB’s investments in Brazen Sky Ltd, a company incorporated in the British Virgin Islands by Jho Low.

Ismee said at the time, he had requested a meeting to be convened by the 1MDB management to update the board of directors, especially on the documents and details requested by KPMG on the issue of Brazen Sky investment, as KPMG had raised suspicions about the “underlying assets” of the investment.

Shafee: Did you by any means think that KPMG was being difficult?

Ismee: They were a bit demanding.

Shafee: They had a good reason to demand. Now, in hindsight, you know what happened to the (investment) money?

Ismee: Yes.

Ismee also agreed to a suggestion by the lawyer that throughout the process, Najib had not obstructed the 1MDB audit by KPMG.

Najib, 68, 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 before judge Collin Lawrence Sequerah continues tomorrow.

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