Malaysia minister quit amid 1MDB-linked debt restructuring plan, court hears

A construction worker walks past a 1Malaysia Development Berhad (1MDB) billboard at the Tun Razak Exchange development in Kuala Lumpur, Malaysia February 3, 2016. REUTERS/Olivia Harris/File Photo

The 1MDB trial of former Malaysian leader Najib Razak sheds light on the extent of his involvement in the troubled state fund, while revealing his early links to fugitive financier Jho Low.

A Kuala Lumpur court heard dozens of witness testimonies related to the 42 million ringgit ($10 million) found in Najib’s personal accounts which allegedly came from SRC International Sdn., once a unit of 1MDB. Lawyers for Najib, who has pleaded not guilty, argued that he was misled by others. The current trial revolves around seven of the total 42 charges that Najib faces for his alleged role in 1MDB.

Key Developments

  • Najib’s next trial remains set to begin Aug. 19 despite appeals by Attorney-General Tommy Thomas to delay it until after the current proceeding is completed
  • Ahmad Husni Hanadzlah, who served as second finance minister under Najib from 2009 to 2016, is the current witness on the stand
  • Separately, Goldman Sachs Group Inc.’s 1MDB hearing was pushed back to Sept. 30 as the process of filing the charges was incomplete

Senior minister resigned amid 1MDB restructuring plan (Aug. 8)

Former Second Finance Minister Ahmad Husni resigned after he was told that he would be moved to another post amid his effort to restructure the finance ministry to cope with 1MDB’s 42 billion ringgit debt, he said on the witness stand. Najib’s lawyers argued that Ahmad Husni is trying to discredit the former premier due to a personal vendetta related to sexual harassment allegations that Ahmad Husni said came from Najib. The judge ruled that the sexual harassment accusations are irrelevant to the trial.

Najib’s lawyers also questioned why Ahmad Husni only objected to a government guarantee for SRC in a private conversation with Najib, and not during a cabinet meeting. The former minister replied that the cabinet unanimously approved the guarantee without any discussion and that he didn’t believe his objection would make a difference.

“It is futile,” Ahmad Husni said. “Whatever I raise will not have any impact. The matter was decided, the prime minister has autocratic power.”

Jho Low acted on Najib’s behalf to ensure checks clear (Aug. 6)

Former AmBank officer Joanna Yu detailed her communication with Low, who contacted her on behalf of Najib to make sure checks issued by the former premier wouldn’t bounce. Yu said on the witness stand that Low made her ensure the accounts had enough funds to clear checks that Najib later issued, showing that Low acted to assist Najib and not as a rogue agent.

Yu said it isn’t possible for the funds to be used without Najib’s knowledge, and said she has no suspicion that any of the checks were forged. Low, who remains at large, has denied any wrongdoing.

Ahmad Husni then took the witness stand to testify that Najib said the 2 billion ringgit loan from state pension fund Kumpulan Wang Persaraan Diperbadankan to SRC was to fund supply of coal from Indonesia for Malaysia’s energy supply. Ahmad Husni said he was shown no documentation on the coal supply, and Najib prevented him from visiting Switzerland to check on SRC funds that were frozen at BSI Bank Ltd. He said he wasn’t involved in the formation of 1MDB and was only told after the fact.

As second finance minister, Ahmad Husni had rallied in support of Najib, who was then premier and also finance minister. He later stepped down from the cabinet and began questioning 1MDB transactions in parliament.

Bloomberg