SINGAPORE (Sept 2): All eyes are once again on former Malaysian prime minister Najib Abdul Razak as he appears for the first hearing of the 1Malaysia Development Bhd (1MDB) trial — his second corruption case, in which he faces four charges of abuse of power and 21 of money-laundering involving a staggering total of RM2.28 billion.
Believed to be the biggest and most wide-ranging kleptocracy in recent years, the scandal drew widespread international attention and eventually led to the ouster of Najib, and the Barisan Nasional administration, after the watershed general election in May 2018.
The trial — also called the Tanore case in reference to the finance firm that allegedly facilitated the flow of 1MDB funds into Najib’s accounts — kicked off at long last on Aug 28, close to seven months since the 66-year-old former premier was charged in court. In his opening statement, lead prosecutor Gopal Sri Ram said Najib’s position of prime minister and finance minister was abused to exert influence over the board of 1MDB, so as to carry out certain abnormal transactions with “undue haste”. “The ultimate aim of the accused was to obtain gratification for himself, [and] he succeeded in achieving that aim. In short, he was its plenipotentiary.”
Sri Ram also painted businessman Low Taek Jho as the “mirror image” of Najib and said the prosecution would prove that both were acting as one at all material times to pull off the crime.
Jho Low, as Low is better known, is now a fugitive wanted by several authorities, including the Malaysian Anti-Corruption Commission and Singapore. He has been identified as the purported mastermind behind the entire sordid affair. The Penang-born playboy is known to cavort with celebrities and throw multimillion-dollar parties.
Sri Ram further outlined the phases in which Najib had allegedly orchestrated to siphon off RM2.28 billion into his own personal accounts. He traced the beginning of the scheme to the joint-venture (JV) formed between 1MDB and PetroSaudi International (PSI), called 1MDB Petro Saudi, established by Low and Saudi businessman Tarek Obaid.
“In 2009, 1MDB took up a US$1 billion loan to pick up the 40% stake, but US$700 million was paid to Jho Low’s [company], Good Star Ltd, that had nothing to do with the JV. Good Star was formed five months before the JV was inked. Further, the JV was inked with PetroSaudi Holdings (Cayman) Ltd and not PSI. Good Star was falsely presented as a wholly-owned unit of PSI,” Sri Ram said.
Pursuant to that, he added, 1MDB converted its supposed US$1 billion equity in the JV to Murabaha notes, and was required to provide another US$1.5 billion to the JV. “1MDB paid US$500 million, which is now missing; another US$330 million [of] 1MDB funds eventually was transferred to Good Star.” Subsequently, the monies channelled through Good Star were distributed to several individuals, including Saudi royalty, whom Najib would insist, later on, “donated” the money to him.
According to Sri Ram, Najib continued to receive millions from 1MDB dealings via its five subsidiaries from the acquisition of independent power producers Tanjong Energy Holdings and Mastika Legenda.
US investment bank Goldman Sachs was hired to arrange the two loans — RM6.17 billion and US$1.75 billion — for the acquisition of Tanjong. A portion of the loans, said Sri Ram, eventually landed up in the accounts of Blackstone Asia — a company controlled by an associate of Jho Low’s, Eric Tan Kim Loong — which channelled US$30 million into Najib’s account from October to November 2012.
The third phase involved a JV between 1MDB and Aabar Investments, called ADMIC, which was supposed to develop the massive Tun Razak Exchange financial hub project in Kuala Lumpur. A US$3 billion bond was raised by Goldman Sachs, but the money did not go to the JV. Rather, some RM2.08 billion was transferred through a web of different companies to Najib’s accounts in March and April 2013.
The fourth phase happened when 1MDB monies were transferred via Aabar to Vista Equity and Blackrock Commodities (Global), from which over RM50 million was transferred to Najib’s account.
Sri Ram said the prosecution would also produce evidence to show that Najib took active steps to evade justice, including sacking the then-attorney general Abdul Ghani Patail.
“He interfered with the course of investigation of this case, which has come to be known as the 1MDB Scandal. He took active steps to effect a cover-up of his criminal acts. The prosecution will rely on all this evidence to show that the accused had the requisite mens rea (intention) when the offences with which he is charged were committed,” Sri Ram said.
As at Aug 29, seven witnesses had been called to the stand, mostly to establish the facts of the case and to identify that Najib was the key figure in 1MDB, with the authority to approve its dealings.
Significantly, however, the prosecution’s sixth witness, a division leader from then ruling party Umno, gave evidence that Najib personally issued a cheque for RM100,000 to his division in August 2013.
Batu Kawan Umno division chief Mohd Noor Ahmad told the court that the money received from Najib, who was party president at the time, was used to conduct activities to help those in need in the constituency.
Under cross-examination by lead defence counsel Shafee Abdullah, Mohd Noor said the Malay community in Batu Kawan, Penang, were “economically less fortunate” than others in the northern state. Mohd Noor also agreed that the money was to have been used to “assist” the Malay community there. That cheque is significant as it is one of the key pieces of evidence in the 21 money-laundering charges against Najib.
In addition to the 1MDB-related charges, Najib also faces seven counts of abuse of power, criminal breach of trust and money-laundering involving about RM42 million in relation to SRC International, a 1MDB subsidiary. The prosecution concluded its case against Najib on Aug 27, after 58 days of hearings over close to five months. The court will decide on Nov 11 whether to call Najib to enter his defence.
Najib’s 1MDB-Tanore trial
The charges
Four counts of abuse of power for using his position as PM, finance minister and 1MDB board of advisers chairman to receive gratification worth:
• RM60.63 million on Feb 24 and June 14, 2011
• RM90.9 million between Oct 31 and Nov 12, 2012
• RM2.08 billion on March 22 and April 10, 2013
• RM49.93 million on June 23 and Dec 19, 2014
21 counts of money-laundering involving over RM4.3 billion
• 1st-9th count (March 22 to April 10, 2013) RM2.08 billion from Tanore Finance Corp to his bank account
• 10th count (Aug 2, 2013) RM652.6 million from his bank account to Tanore Finance Corp
• 11th & 12th count (Aug 2 and 7, 2013) RM20 million to Umno via cheque RM100,000 to Umno Batu Kawan via cheque
• 13th count (Aug 7, 2013) RM246,000 to Lim Soon Peng via cheque
• 14th count (Aug 12, 2013) RM2 million to ORB Solutions Sdn Bhd via cheque
• 15th count (Aug 14, 2013) RM303,000 to Semarak Konsortium Satu Sdn Bhd via cheque
• 16th-19th count (Aug 15 to 23, 2013) RM1.38 million from his bank account to Tanore Finance Corp
• 20th and 21st count (Aug 27 and 30, 2013) RM162.44 million from one of his AmIslamic Bank accounts to another
The case of SRC funds totalling RM42 million
Total number of charges: 7
3 counts of criminal breach of trust
Offence: Section 409 of the Penal Code
Penalty: Maximum 20 years’ jail + whipping + a fine.
1 count of abuse of power
Offence: Section 23(1) of MACC Act 2009 (punishable under Section 24 of the same act)
Penalty: Maximum 20 years’ jail + a fine of not less than five times the amount of the bribe, or RM10,000, whichever is higher.
3 counts of money laundering
Offence: Section 4(1)(b) of Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001
Penalty: Maximum 15 years’ jail + a fine of RM5 million, or five times the amount, whichever is higher, for each charge.
