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1MDB a fool to have paid US$1bil (RM4.18bil) for 1MDB-PSI joint venture

The corruption trial over the sovereign wealth fund continues in Malaysia.

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Updated: October 25, 2019

1Malaysia Development Berhad (1MDB) was a fool to have paid US$1bil (RM4.18bil) to obtain a 40% stake in the 1MDB and Petro Saudi Holdings (Cayman) Ltd joint venture (JV), while PetroSaudi International Ltd (PSI) only injected US$108mil (RM452mil) to get a 60% share, the High Court heard on Thursday (Oct 24).

Former 1MDB chief executive officer Datuk Shahrol Azral Ibrahim Halmi agreed to this suggestion by defence lead counsel Tan Sri Muhammad Shafee Abdullah when queried at the 1MDB trial of former prime minister Datuk Seri Najib Razak.

Petro Saudi Holdings (Cayman) Ltd was a subsidiary of PSI.

Shahrol Azral said the asset value which was meant to compensate the JV value was revealed in a valuation report by American energy economist Edward L. Morse, as well as legal opinion from the 1MDB legal team, Brian Chia from Wong & Partners, presented at the 1MDB board meeting on Oct 10,2009.

The oil and gas assets purportedly owned by PSI, were located in Argentina and Turkmenistan and were valued by Morse’s firm at US$3.625bil (RM15.17 billion).

Shahrol Azral said he signed the engagement letter regarding the JV on behalf of 1MDB, but could not recall who signed for PSI.

Muhammad Shafee: The benchmark of the Argentinian asset was at US$108,109,651 (RM452mil). Do you remember what was the make-up for Turkmenistan asset?

Shahrol Azral: US$3.518bil (RM14.72bil).

Muhammad Shafee: So US$3.5bil (RM14.72bil), a mere US$108mil (RM452mil) is the Argentinian asset value.

Shahrol Azral: Yes.

Muhammad Shafee: You know the Turkmenistan asset subsequently proven was not PSI’s?

Shahrol Azral: I don’t remember.

Muhammad Shafee then referred the witness to a media report, which stated that the assets in Turkmenistan were owned by Buried Hill Energy (Cyprus) Co Ltd.

According to the counsel, the publication had obtained the rights to all the documents stolen from PSI by former PSI executive Xavier Andre Justo before he fled to Bangkok, Thailand.

Muhammad Shafee: You agree with me, if Turkmenistan asset was swiped under our feet, if it was not an asset of PSI, 1MDB needed to inject only US$108mil (RM452mil) to match the Argentinian assets.

Shahrol Azral: Correct.

Muhammad Shafee: Interesting, because we look like fools. 1MDB looked like fools. 1MDB, like fools, put in US$1bil (RM4.18bil) for 40%. They (PSI) only put in US$108mil (RM452mil) and took 60%.

Shahrol Azral: Correct.

Earlier, Shahrol Azral agreed to a suggestion by the counsel that he did not inform the board of directors of 1MDB upon learning about the true ownership of PSI’s Turkmenistan asset.

Muhammad Shafee: At some point, a long time ago, you found out that it was not their asset.

Shahrol Azral: Not a long time ago, it was in 2015… I was still on the board.

Muhammad Shafee: When you found out, did you take the matter to the board?

Shahrol Azral: No.

Shahrol Azral added that the board, which was chaired by Tan Sri Lodin Wok Kamaruddin at that time, was not even alerted about such important information.

Najib, 66, faces four charges of using his position to obtain bribes totalling RM2.3bil from 1MDB funds and 21 charges of money laundering involving the same amount.

The hearing before Judge Collin Lawrence Sequerah continues on Tuesday (Oct 29).

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The Star
About the Author: The Star is an English-language newspaper based in Petaling Jaya, Malaysia.

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