Witness: Jho Low said he could get PM to bulldoze US$6b guarantee letter

1MDB TRIAL | Former 1MDB chief executive officer Shahrol Azral Ibrahim Halmi told the Kuala Lumpur High Court that fugitive businessperson Low Taek Jho claimed he could get then prime minister Najib Abdul Razak to bulldoze a US$6 billion guarantee letter in 2013.

Testifying during Najib's RM2.28 billion 1MDB graft trial today, Shahrol said Low had asked that 1MDB, through Goldman Sachs, draft the "letter of comfort" and send it to the Finance Ministry after which he could get it to proceed.

The letter of comfort was for a US$6 billion government guarantee for a joint venture between 1MDB and Aabar Investment PJS Ltd (BVI) through which 1MDB would commit US$3 billion while Aabar would also commit US$3 billion.

However, the deal was actually with the British Virgin Islands-based Aabar which was masquerading as a subsidiary of Abu Dhabi's International Petroleum Investment Company (IPIC). In the end, Aabar BVI did not deliver on its US$3 billion commitment.

The letter was meant to convince financiers so that the joint-venture entities were able to raise funds.

The deal was used as a premise to raise a US$3 billion bond for 1MDB, the third one arranged by Goldman Sachs, of which a substantial sum was later misappropriated.

"This was in the talking points by Jho Low. It had to be done quickly. Draft the comfort letter and he would get the Finance Ministry and prime minister to bulldoze it through," Shahrol said while under cross-examination by defence counsel Wan Aizuddin Wan Mohammed.

The witness said Low, referred to by most as "Jho", conveyed that it was essential to rush the process based on the premise that a delegation from Abu Dhabi would be visiting Malaysia soon.

Wan Aizuddin: It tallies with your letter to the prime minister that this needs to be done before the official visit?

Shahrol: Yes.

Wan Aizuddin: Are you saying someone from Goldman Sachs or even Low has been dealing with the Finance Ministry staff, including this (ministry official) Siti Zawiyah who prepared the internal memo?

Shahrol: I have no direct knowledge. This draft comfort letter looks like it came from Goldman Sachs.

Wan Aizuddin: The need for this letter of comfort was not bulldozed by the Finance Ministry but by Goldman Sachs.

Shahrol: Disagree. As Goldman Sachs would not have influence over the internal memo, the instruction to the secretary-general of the treasury, to the legal department, these happened in two days. I don't think Goldman Sachs has that kind of control over the Finance Ministry.

The internal memo was on proceeding with the "letter of comfort" for the joint-venture after Shahrol had written to Najib on the matter.

Wan Aizuddin later suggested that the letter was ultimately a guarantee but was misrepresented as a mere "comfort" and this had raised concerns among some Finance Ministry officials.

Shahrol acknowledged some pushback but said he was informed by Low that it could be "managed".

Shahrol, in his letter to the Finance Ministry, had included the proposed "letter of comfort" as an annexe.

Najib was at the time the prime minister, finance minister and 1MDB shareholder. He was also the 1MDB board of advisers chairperson.

Wan Aizuddin: Based on the letter, I put to you that your true intention of this annexe letter being sent to the Finance Ministry was to manipulate the representation as a letter of comfort but based on the letter prepared by Goldman Sachs and 1MDB, it is a letter of guarantee by the government.

Shahrol: No comment.

Wan Aizuddin: You are the head of 1MDB management, you would be briefed on any such document.

Shahrol: I only got talking points from Jho. Jho told me the annexed letter came from Goldman Sachs and they are to negotiate with the Finance Ministry. When the pushback came that the letter of comfort looked like a guarantee, he (Low) said he and Najib would manage it on their side.

However, Shahrol conceded that he did not take the initiative to confirm the matter with Najib.

"Jho assured me that things are under control and boss would bulldoze so I left it to him [...]," he said.

Wan Aizuddin later suggested that Shahrol was Low's "mirror image" to which lead prosecutor Gopal Sri Ram joked that the defence shouldn't be "borrowing phrases".

The prosecution, in its opening statement for the case, had accused Low of being Najib's "mirror image".

Wan Aizuddin laughed and said he was doing it with permission.

Shahrol disagreed that he was a mirror image of Low. 

Meanwhile, during proceedings before the Kuala Lumpur High Court this morning, Wan Aizuddin grilled Shahrol on whether Low allegedly utilised the acronym Admic for the 1MDB-Aabar joint venture company, in order to confuse observers with another company with an identical acronym.

The lawyer was asking the witness in relation to the existence of an unrelated corporation, Abu Dhabi Media Investment Corporation (Admic), which already existed at the time the 1MDB-Aabar joint venture corporation was incorporated in the Middle Eastern nation.

Wan Aizuddin was referring in the context where initially in 2013, the name of the 1MDB-Aabar joint venture company was Malaysian Abu Dhabi Investment Company Limited, but was later that same year changed to Abu Dhabi Malaysian Investment Company Limited (Admic).

When Wan Aizuddin informed Shahrol that the Abu Dhabi Investment Corporation had already existed since 2012, Shahrol replied he only heard of the company from the lawyer today.

Wan Aizuddin: I put it to you that the change of name to Admic (for the 1MDB-Aabar joint venture company) was for the purpose to confuse the people, to show that the JV (joint venture company between 1MDB and Aabar) could be incorporated in Abu Dhabi.

Shahrol: I have no comment.

Wan Aizuddin: Jho had always been in the habit of incorporating offshore companies with similar names to that of established firms like Blackstone and so on.

Shahrol: I agree.

Wan Aizuddin: This change of name was a way for Jho to perfect his plan in order for him to embezzle billions of dollars later from 1MDB?

Shahrol: I cannot comment on what his intent was.

Wan Aizuddin: This (1MDB-Aabar joint venture) company was incorporated offshore to avoid scrutiny from Bank Negara and the authorities of Malaysia and Abu Dhabi?

Shahrol: I have no comment.

The witness also testified that he did not question much then on the need for 1MDB-Aabar joint venture company to be incorporated offshore because at that time he was already in the midst of a transition to step down as 1MDB CEO, and had left it to Low and 1MDB general-counsel Jasmine Loo to arrange the matter. Shahrol was the 1MDB CEO from 2009 to March 2013.

Proceedings before judge Collin Lawrence Sequerah will resume tomorrow morning.

Najib is on trial over four charges of abusing his position to obtain gratification and 21 counts of money laundering in relation to RM2.28 billion in 1MDB funds.

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