Hazem denies involvement in 1MDB fundraising exercise as claimed by Shahrol

KUALA LUMPUR : Former 1MDB chief executive officer Mohd Hazem Abdul Rahman has denied being involved in the US$3 billion fundraising exercise undertaken by the state fund in 2012, contradicting an earlier statement by his predecessor Datuk Shahrol Azral Ibrahim Halmi.

Testifying in the 1MDB-Tanore trial at the High Court, Hazem said the fundraising exercise by 1MDB as detailed in his witness statement was made in hindsight. 

Replying to defence counsel Wan Aizuddin Wan Mohammed, he maintained that he was never involved in any of the negotiations leading to the issuance of the bonds and the accompanying letter of support from the government.

Wan Aizuddin: You were never involved in the letter of support and any negotiations on this?

Hazem: No

Shahrol, in his 270-page witness statement, had said he handed over the responsibility of managing the fundraising exercise to Hazem because the Tun Razak Exchange (TRX) joint venture, which was what the bond issuance was intended for, was under Hazem’s responsibility as chief operating officer of 1MDB, and also because he was set to take over as the company’s CEO from Shahrol.

Shahrol claimed that he was “left out of the loop” in the joint venture as purported master conspirator Low Taek Jho (better known as Joho Low), 1MDB’s legal counsel Jasmine Loo and Hazem “managed everything”.

The joint venture was initiated between 1MDB and its Abu Dhabi partner, Aabar Investment PJS Ltd (Aabar BVI), and the two parties agreed to contribute US$3 billion each to co-develop TRX, initially called the Kuala Lumpur International Financial District.

With the help of Goldman Sachs, 1MDB issued bonds to raise US$3 billion, even though its Arab partner did not put in a cent. This is because Aabar BVI was in fact a company incorporated by Jho Low and his associates in the British Virgin Islands (BVI).

Although passed off as a subsidiary of International Petroleum International Company (IPIC), Aabar BVI was not a unit of IPIC and only bore a similar name to the genuine Aabar Investments PJS.

The joint venture between 1MDB and a special purpose vehicle set up by both companies called Abu Dhabi Malaysia Investment Company Ltd (ADMIC) was announced as the “first major multinational anchor investor” in TRX with an initial funding of US$6 billion.

According to news reports, TRX had not seen much of the US$3 billion raised, and TRX City — the property arm of 1MDB — had to sell parcels of land within the 70-acre development to finance infrastructure costs amounting to RM3 billion, which had been promised by Aabar BVI and 1MDB.

This is reflected in the National Audit Department report on 1MDB dated May 15, 2018, which said TRX City sold five parcels of land for RM1.36 billion, and that RM1.1 billion from the land sales had been “advanced” to 1MDB.

In the 1MDB-Tanore trial, former prime minister Datuk Seri Najib Razak is charged with four counts of power abuse to enrich himself with RM2.3 billion from 1MDB and 21 counts of laundering the same amount. He faces up to 20 years’ imprisonment if convicted.


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