KUALA LUMPUR – Former 1Malaysia Development Bhd chief executive Mohd Hazem Abd Rahman never informed the sovereign fund’s board that investments poured into shell company Brazen Sky Ltd were worthless, said Datuk Seri Najib Razak’s lawyers.
In a statement today, the former prime minister’s legal team led by Tan Sri Muhammad Shafee Abdullah said Hazem did not disclose the status of Brazen Sky’s funds after shareholder MoF Inc instructed the 1MDB board to repatriate funds from the offshore company to be invested in local institutions.
The defence said the order was given at a meeting on April 22, 2014.
Hazem, who was 1MDB CEO at the time, recently testified that he had suspected Brazen Sky’s investments were worthless since he began the top job.
“It was suggested to Hazem that the 1MDB management headed by him was in a catch-22 situation as they knew there was nothing to be repatriated by Brazen Sky or 1MDB Global Investment Ltd,” said the team following Najib’s trial at the high court today.
“Yet, the management headed by Hazem made a commitment to repatriate the funds from investment portfolios held by Brazen Sky and 1MDB Global Investment Ltd.”
Najib faces four counts of power abuse in relation to gratification he received worth RM2.28 billion, as well as 21 counts of money laundering involving RM4.3 billion.
His lawyers said the conundrum was not disclosed to the 1MDB board at the time by any of the senior management, including Hazem, who sat on the board together with Datuk Shahrol Azral Ibrahim Halmi.
The defence also suggested that Hazem, together with wanted businessman Low Taek Jho, better known as Jho Low; former 1MDB chief financial officer Azmi Tahir; former 1MDB executive director (finance) Terence Geh Cho Heng; and, Shahrol Azral, conspired to obtain a US$975 million facility from Deutsche Bank.
It said the funds were requested on the pretext of buying back options from the Seychelles-based Aabar Investments PJS Ltd, which is not the same as the investment firm from the United Arab Emirates.
The defence said 1MDB gave the real Aabar Investments the option to purchase 49% shares in 1MDB Energy Ltd and 1MDB Energy Langat Ltd to purportedly procure a guarantee from Abu Dhabi’s International Petroleum Investment Company over the bonds issued by the two 1MDB units.
However, it said, the proceeds from the loan were never used to buy back the option, but rather, were transferred to Aabar Seychelles, another fake entity that in turn transferred the funds to various others.
It said the monies passed through Bridge Global Absolute Return Fund, Brazen Sky and 1MDB Global Investment Ltd, and were “totally annihilated” by Aabar Seychelles.
The defence produced a flow chart showing the “recycling” and “layering” of funds, allegedly giving the impression that Brazen Sky had “redeemed” in cash from its investment in Bridge Global Absolute Return Fund.
Hazem dishonestly informed the 1MDB board at a November 4, 2014 meeting that a total of US$1.2 billion was received from the redemption of the investment portfolios held by Brazen Sky, it said.
It added that he concealed from the board that this purported redemption was actually proceeds of the US$975 million Deutsche Bank loan.
“Our senior counsel rounded up this session by confronting Hazem that he committed several criminal breach of trust and money-laundering offences because he authorised funds to be transferred in contravention of their purpose and without authorisation from the board.
“Hazem repeatedly answered ‘no comment’ and offered no justification to all the allegations put to him by the senior counsel.” – The Vibes, August 23, 2021
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