1MDB enters largest corporate liability trap in history - Former 1MDB CEO

15 Sep 2020 / 07:55 H.

KUALA LUMPUR: A former 1Malaysia Development Berhad (1MDB) chief executive officer told the High Court here that he wanted to resign in 2013 as he was worried about 1MDB which he felt was entering the largest corporate liability trap in history.

Mohd Hazem Abdul Rahman, 48, said he had sent an email to 1MDB chief finance officer, Azmi Tahir to raise his concerns on the total number of projects and funds on all portfolios relating to 1MDB which were felt unrealistic.

The 10th prosecution witness said when reading his witness statement in the examination-in-chief by deputy public prosecutor Mohamad Mustafa P. Kunyalam in the trial of the Datuk Seri Najib Tun Razak involving RM2.3 billion 1MDB funds.

According to Mohd Hazem, when he was the CEO and member of the 1MDB board from March 2013 to January 2015, he started feeling pressured to make decisions on the investments and loans of the company.

“I started to understand that several projects funded and managed by 1MDB caused the company’s financial position to be problematic as there was too much domestic and foreign debts committed by 1MDB based on the plans of fugitive businessman Low Taek Jho or Jho Low which may not be paid back.

“I was worried when 1MDB ran out of funds in the country while the company’s funds abroad could not be repatriated,” he said.

He added that he was also suspicious that 1MDB funds abroad may have been used without the knowledge of 1MDB management.

“I had raised the matter several times with Datuk Azlin (Datuk Azlin Alias, Najib’s chief private secretary) and to then 1MDB chairman, Tan Sri Lodin Wok Kamaruddin to be brought to the attention of Datuk Seri Najib but the answer I received was that he had been informed of the matter.

“At the end of 2014, Datuk Seri Najib told Tan Sri Lodin that the 1MDB funds abroad could not be brought back even though 1MDB was facing financial constraint to service its RM2.5 billion debt to Maybank,” he said and added the matter was against business ethics.

The witness also concluded that all the investment plans by Jho Low were only to make the plan appeared like real transactions carried out.

“Jho Low ordered the members of the 1MDB board and management to believe that the business was for the benefit of the company before being followed by fund raising as the company had to borrow to obtain capital.

“I started to be suspicious of funds through fund raising which had been abused after it was sent overseas and we did not have full access and did know the status of the funds,” he said.

The witness stressed that according to the business plan discussed by Jho Low at the board of directors level, it was a normal business plan with normal risks and profits.

”The unusual matter in the business plan was that fund raising was through debts but the funds accumulated could not used, its status unknown and final answer was that they were investments by fund managers.

“Even more suspicious was that the board did not explain the complete status of investment when auditors raised the issues of the fund, Jho Low in a panic prepared a report and script for Datuk Seri Najib and for us at 1MDB to answer queries from the auditors,” said Mohd Hazem.

According to Mohd Hazem, in each joint venture project developed by 1MDB, Jho Low would ask him to send project progress and at the same time, Jho Low would also give instructions via email.

“I also got to know that the progress of 1MDB joint venture with Aabar Investment PJS Ltd through discussions with Azmi and 1MDB lawyer, Jasmine Loo. I knew it would be starting with the issuance of US$3 billion bond to invest in the project.

“The bond fund was not issued through Government Guarantee as there were too many government guarantees issued by the Government of Malaysia for government companies including 1MDB,” he said.

Questioned by Mohamad Mustafa if the US$3 billion fund was approved without support letter from Najib himself, the witness said no.

The witness said Government Guarantee and letter of support did not have much difference as in the end it would required the intervention of the government to pay the debt if 1MDB was unable to settle it.

Najib, 67, is facing four counts of abusing his position to solicit bribes amounting to RM2.3 billion from 1MDB funds and 21 charges of money laundering involving the same amount.

The trial before Justice Collin Lawrence Sequerah continues tomorrow. -Bernama

email blast