US$1bil deal done with proper approval: Ex CEO

PETALING JAYA: Prime Minister Datuk Seri Najib Abdul Razak was not only aware but had signed the USD1 billion (RM3.92 bil) joint venture between 1Malaysia Development Berhad (1MDB) and PetroSaudi Ltd.
"He signed the document, so that means that he is aware," former 1MDB chief executive officer Datuk Shahrol Azral Ibrahim Halmi (pix) had testified at a Public Accounts Committee (PAC) hearing on Nov 25 last year.
According to recently released transcripts of the Hansard recording of the the PAC proceeding, Shahrol had told the committee that 1MDB had had obtained both shareholders' and Board of Directors approval for the deal, which had been inked by the Prime Minister as per required under 1MDB's Memorandum & Articles of Association (M&A).
According to Article 117 (c) of the M&A, any financial commitment (including investment), restructuring or any other matter which is likely to affect the guarantee given by the Federal Government for the benefit of the company, the national interest, national security or any policy of the government, has to get a written approval from the prime minister.
"There was a very robust discussion on how the joint venture was eventually carried out. "But I would like to reiterate that actually the agreement was tabled and it was approved by the Board and that was what we, the management, took as the authority to go and finalise the agreement," he said in the hansard recording, when questioned by PAC member William Leong Jee Keen and Tony Pua Kiam Wee.
PAC, in its 106-page report on its findings on 1MDB's governance and management control tabled in the Dewan Rakyat last Thursday, stated it found that the US$1 billion joint venture deal had been done without due diligence.
"The US$1 billon investment by 1MDB in this joint venture was done without a due-diligence process; there are no specific details on the project stated on the proposal paper that was prepared by the management and no feasibility study was done on the investment project that would be carried out," the PAC report said.
The PAC had found that the Board of directors had failed in their duty to protect the company and its shareholders, and held Shahrol Azral responsible for weaknesses in the company's management.
It also called for the relevant authority to investigate Shahrol and other relevant management officials.
According to the handsard, in the same proceeding, Pua had questioned the involvement of businessman Low Taek Jho in the joint venture, to which Shahrol told the committee that Low had introduced PetroSaudi Ltd individuals to the 1MDB.
"He had introduced individuals in there to us but no further role than that," he said, adding that the individual concerned was PetroSaudi Ltd executive Tarek Obaid.
Queried on the fact that Low's name was shown in the minutes as having sat in the board meeting which decided on the joint venture with PetroSaudi, Shahrol explained that Low was an adviser in Terengganu Investment Authority (TIA) which was later renamed 1MDB, until May 2009.
"Yes. At that time, as I remember, the Board invited Prince Turki (Abdullah Al Saud) but (he) sent his apology and asked Low to go and represent and answer any questions, but I do not believe Low (stayed) for the deliberation and for the entire meeting," he said.
"I do not think that Low was given like power to decide 'Yes' or 'No'. I think he was asked to be there to just answer any questions," he added.