1MDB board performed ‘sandiwara’ to hide fact that money in Swiss bank account was actually for Umno — witness

KUALA LUMPUR : Former 1Malaysia Development Bhd (1MDB) CEO Mohd Hazem Abdul Rahman testified today (May 27) that the board of directors performed a “sandiwara” (drama) to hide the fact that money in 1MDB’s BSI bank account in Switzerland actually belonged to Umno.

Testifying in the 1MDB-Tanore trial today, Hazem was subjected to questioning from defence lawyer Wan Aizuddin Wan Mohammed about the funds which Hazem had previously claimed were for the Malay party. 

Hazem had previously testified that Najib’s private secretary, the late Datuk Azlin Alias, and fugitive financier Low Taek Jho (Jho Low) told him that the investment fund was set up to raise money for the ex-prime minister and his political party Umno. 

While he did say that the money belonged to Umno in his witness testimony, Hazem had never brought this up with the board of directors or even the board of advisors, of which former prime minister Datuk Seri Najib Abdul Razak — who is the accused in this case — is the chairman. 

When asked by Wan Aizuddin about why he did not formally bring this up with the board, Hazem said every member of the board knew the purpose of the money. 

Former 1Malaysia Development Bhd (1MDB) CEO Mohd Hazem Abdul Rahman (Photo by Zahid Izzani Mohd Said/The Edge)

He even said this “scheme” was never brought to the board formally because it was never meant to be put on record

Wan Aizuddin: Why not put it on record [that the funds were for Umno]?  

Hazem: This scheme was not supposed to be put on record. 

Hazem said this was a conspiracy in which all members participated, even adding that meeting minutes were just for show as they all knew the money was for Umno’s use. 

Wan Aizuddin: So the 1MDB board’s direction to management to liquidate the funds was all a sandiwara? 

Hazem said yes. 

Hazem, however, conceded that he had never heard Najib personally say that the money was for Umno and had only heard this from Azlin and Jho Low. 

He also acknowledged that when part of the money had come back from Switzerland, it did not go to Umno but went into 1MDB’s accounts. 

The money involves US$3 billion which 1MDB Global Investments Ltd (1MDB GIL) — a subsidiary of 1MDB — raised for Abu Dhabi Malaysia Investment Company (Admic) Ltd, a 50:50 joint venture between 1MDB and Aabar Investments PJS Ltd (Aabar BVI) — a company incorporated in the British Virgin Islands.

As per terms of the JV, 1MDB GIL, of which Hazem was also a director, had raised US$3 billion in bond issuances, Admic was supposed to raise another US$3 billion for the development of the TRX, or the Tun Razak Exchange, in Kuala Lumpur

However, as soon as Malaysia had raised the money, Admic had gone cold and did not hold its end of the JV up. 

Jho Low had also moved hastily with his colleagues to siphon the US$3 billion out of the 1MDB account to four shell companies mostly owned by him and his associates, namely Devonshire Funds Ltd, EEMF, Granton Property Holding Ltd and Tanore Finance Corporation. All this happened in March 2013.

Out of the US$3 billion, US$2.721 billion was disbursed into the account of 1MDB GIL with BSI Bank at Lugano in Switzerland. The balance went to pay the fee of Goldman Sachs.

From the US$2.721 billion, a sum of US$1.06 billion was paid into the account of two fiduciary funds, namely Devonshire and EEMF. 

Devonshire received US$646.46 million in five tranches on March 20 and 21, 2013. Meanwhile, EEMF received US$414.14 million in three tranches on March 20 and 21, 2013.

Devonshire transferred US$430 million to Granton, which is a company controlled by Eric Tan, Jho Low’s partner. 

On March 21, 2013, Granton transferred the whole of that sum to Tanore, which is also controlled by Tan. On the same day, Devonshire transferred a sum of US$210 million to Tanore. 

Then, between March 22 and 25, 2013, EEMF transferred US$250 million to Tanore, which by then had US$890 million.

Between March 21, 2013 and April 10, 2013, Tanore transferred US$681 million into Najib’s account.

In the 1MDB-Tanore trial, Najib 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.

By : Timothy Achariam – THE EDGE MARKETS

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