Part of 1MDB funds used to buy land in Penang, court told
KUALA LUMPUR: The High Court was told here yesterday that part of the funds from the US$3 billion in bonds issued by 1Malaysia Development Berhad (1MDB) for the Bandar Malaysia and Tun Razak Exchange (TRX) projects was used for the purchase of land in Ayer Itam, Penang.
Former 1MDB chief executive officer Mohd Hazem Abdul Rahman, 48, said the land purchase was among Umno’s initiative s during the 13th General Election campaign in May 2013.
“When former prime minister Datuk Seri Najib Razak attended one of the campaigns in Penang, he stated in a ceramah (campaign speech) that the purchased land would be developed by 1MDB to build an affordable housing project in Ayer Itam, Penang,” said the 10th prosecution witness.
Hazem, who was the CEO and board member of 1MDB from March 2013 to January 2015, said this while reading his witness statement at Najib’s corruption trial involving RM2.3 billion of 1MDB funds.
When asked by deputy public prosecutor Mohamad Mustafa P. Kunyalam how he knew that 1MDB funds were used to purchase the land, Hazem replied: “I was present at the ceramah.”
Hazem, however, did not elaborate on the land acquisition.
He said 1MDB board members had also never agreed for the US$3 billion in funds to be used to repay the company’s debt and that it was only meant for the Abu Dhabi-Malaysia Investment Company (ADMIC) joint venture and for financing TRX.
“Of the US$3 billion in bonds issued, only about US$2.7 billion nett was received by 1MDB’s subsidiary, 1MDB Global Investment Limited (1MDB GIL), after deducting administrative costs, and deposited in 1MDB GIL’s account at BSI Bank in Lugano, Switzerland.
“Around March 2013, I was told by 1MDB lawyer Jasmine Loo that the funds would be invested in BSI Singapore. At the time, there was no need to use the funds because 1MDB did not have any project to be funded.”
Hazem said he was aware that the decision to invest funds in BSI Singapore strayed from the original purpose the bonds were issued for.
“The funds were also never handed over to ADMIC. I know this because I know Jasmine’s instructions were from wanted businessman Low Taek Jho or Jho Low, which also came from Datuk Seri Najib.”
Hazem said in September 2013, he had contacted Jho Low to ask for permission to bring back the 1MDB funds kept abroad to finance the acquisition of independent power plant J I M A H E n e r g y Ve ntures.
“Jho Low, however, informed (me) that the funds cannot be used because they were for Umno. After hearing this, I understood that Datuk Seri Najib was controlling the funds for Umno.”
He said the company then had to source funds for the acquisition through another loan, which he claimed frustrated him, and that he became concerned about the company’s growing debts.
Hazem said at the time he resigned from 1MDB, there was still money left in 1MDB GIL’s account, half of which had been invested by the fund manager at BSI Singapore.
“The money was also used in mid-2013 to purchase Ayer Itam Estate land in Penang for about RM1 billion, repay the debt from Standard Chartered Bank amounting to about RM2 billion and may have also been used to pay interest on other loans.
“I did not have access or control
over the funds even though I was the CEO. I had repeatedly made requests to Jho Low to bring home the funds to finance 1MDB’s needs.”
Hazem said Jho Low’s response was that the funds could not be brought home as they were required by Umno.
“But I was informed by the then 1MDB chairman Tan Sri Lodin Wok Kamaruddin that Datuk Seri Najib did not allow the funds to be brought home. Although no clear reason was given, I had to abide by this because it (instruction) came from Datuk Seri Najib.
“So I understood that, indeed, all these matters were with his (Najib’s) knowledge and I had to comply with the instructions.”
Najib, 67, is facing four charges of using his position to obtain gratification amounting to RM2.3 billion of 1MDB funds and 21 counts of money laundering involving the same amount.
The trial before judge Collin Lawrence Sequerah continues.