1MDB reported directly to Najib, witness tells court

The former deputy secretary-general of the finance ministry told the Kuala Lumpur High Court today that 1MDB reported directly to Najib Razak regarding the company’s operations and affairs.

Siti Zauyah Mohd Desa, 63, said 1MDB CEO Shahrol Azral Ibrahim Halmi had informed the Minister of Finance Incorporated (MoF Inc) of this during the discussions and transfer of Terengganu Investment Authority (TIA) shares to MoF Inc in 2009. TIA was officially converted to 1MDB in 2009.

Siti Zauyah, the 26th prosecution witness, said this during cross-examination by Najib’s lawyer Muhamad Shafee Abdullah at the former prime minister’s trial on the misappropriation of RM2.3 billion from 1MDB.

She said 1MDB’s management refused to cooperate and discuss the company’s memorandum and articles of association (M&A) which were not the same as the other companies under MoF Inc and also contained amendments that were made without permission.

“They (1MDB) had the PM (prime minister) behind them, so they told me to only deal with the PM,” she told the court.

Shafee: How did you get the idea that the PM was behind them? Who’s the culprit that told you this?

Siti Zauyah: Shahrol told me… he refused to discuss matters regarding (M&A).

She said she informed the second finance minister, Ahmad Husni Hanadzlah, about the 1MDB M&A issue but that Husni told her that he did not want to get involved.

Siti Zauyah said that former treasury secretary-general Mohd Irwan Serigar Abdullah also told her not to proceed with any actions when she discussed the matter with him.

Previously, Husni told the court that he had been asked by Najib not to interfere in 1MDB’s plans to invest in oil services and production company PetroSaudi International Ltd (PSI).

Husni also told the court about the concerns he had over the country’s situation and Najib following the establishment of 1MDB, which led him to send a personal letter to the Pekan MP in August 2010.

In her previous testimony, Siti Zauyah said Article 117 of 1MDB’s M&A which states that the appointment and removal of any director of the company will not take effect without the written approval of the prime minister was not referred to her division during the process of discussions and transfer of TIA shares to MoF Inc.

Article 117 also states that the prime minister’s prior written approval is required for any financial commitment (including investments) and restructuring likely to affect the guarantee given by the government for the benefit of the company, national interest as well as national security.

Siti Zauyah said she did not know how Clause 117 was inserted as it was prepared earlier by 1MDB’s company secretary before it was transferred to MoF Inc.

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.