1MDB: Ex-CEO hesitant to confirm bonds were raised to embezzle proceeds

Former 1MDB chief executive officer (CEO) Mohd Hazem Abd Rahman, 47, however, was not eager to fully agree with the contention made by Najib’s lead counsel, Tan Sri Muhammad Shafee Abdullah during cross-examination at Najib’s trial before High Court Judge Collin Lawrence Sequerah.

“I believe so,” said Mohd Hazem, the 10th prosecution witness who also seemed hesitant to agree with Muhammad Shafee’s suggestion that the conspiracy was carried out by 1MDB’s own insiders, one of them being fugitive businessman, Low Taek Jho or Jho Low with the help of US investment bank, Goldman Sachs.

Muhammad Shafee then referred the witness to a 1MDB’s Director’s Circular Resolution (DCR) which was signed off by the company’s chief financial officer (CFO) Azmi Tahir.

Muhammad Shafee: I want to find out, what I will ask you is disclosure in a way, regarding the conspiracy to mislead 1MDB, that is to profit wrongfully. The aggregate acquisition amount is RM2.75 billion at most, but the bonds raised was US$1.75 billion (around RM5 billion at material time) which means we have RM5 billion in hand for acquisition at RM2.75 billion which is almost double the amount.

Mohd Hazem: Yes.

Muhammad Shafee: As a person with finance background, having read all the documents present, can you offer a reason why another billion was necessary?

Mohd Hazem: From my view, it was not necessary.

Moving on to another topic, Muhammad Shafee then brought up another DCR in relation to the bonds to be issued by 1MDB Energy Langat (1MEL) which was signed by another 1MDB CEO, Datuk Shahrol Azral Ibrahim Halmi and Azmi.

The document, among others, clearly stated that 1MDB is a sole guarantor, with no mention of International Petroleum Investment Co (IPIC) as a guarantor, even though there was a verbal statement between 1MDB personnel that it would.

In response to this, Mohd Hazem said he was not aware of IPIC not being a guarantor (for the bond) at the material time, adding that he only realised this during the current cross-examination.

Muhammad Shafee said Azmi should have known that IPIC was not a guarantor, also pointing out that Shahrol Azral has made “dubious statements" that there was an "indirect guarantee (from IPIC)".

Mohd Hazem: I think there was an indirect guarantee but I don't know the structure. From what I have said earlier, the bonds could not be raised unless IPIC is a guarantor.

Muhammad Shafee: So there can be an indirect guarantee but you don't know how it is mechanised.

Mohd Hazem: Yes.

Further questioned by the lawyer, Mohd Hazem agreed that it was not normal for 1MEL to request its mails to be sent to its Hong Kong office instead of Malaysian office.

Referring to a document from the defence bundle, Muhammad Shafee said 1MEL has asked Zurich-based Falcon Private Bank to send all mails to its Hong Kong office and asked the witness if he has any idea why 1MEL would want to do this to which the witness replied that he could not comment and was not aware as to who made the directive even though he was one of the signatories of 1MEL.

Najib, 67, is facing 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.