KUALA LUMPUR (Dec 22): Former 1Malaysia Development Bhd (1MDB) chairman Tan Sri Mohd Bakke Salleh testified on Wednesday (Dec 22) that Datuk Seri Najib Razak, who was then prime minister, did not respond to his text messages about the outflow of US$700 million to an unknown entity.

Bakke, currently the chairman of Petroliam Nasional Bhd (Petronas), also said that when he informed Najib via a text message that the management was not following the board of directors' instructions, the then premier did not reply, which according to Bakke was "unusual".

"I informed [Najib] on Oct 3 [2009]. I sent him an SMS message on my BlackBerry handphone, but I never got a reply, which was not a normal response or reaction I had received before.

"In the past, any messages I sent to the former prime minister I received [a reply]," he added.

Testifying as a prosecution witness in the 1MDB audit tampering case, Bakke said the 1MDB board had directed the US$1 billion to be deposited into the accounts of 1MDB PetroSaudi Ltd, the fund's joint venture (JV) company with PetroSaudi.

However, he said US$700 million was transferred to an unknown entity which the board later knew as Good Star Ltd. Good Star is controlled by fugitive financier Low Taek Jho or Jho Low.

He also testified that he was "flabbergasted" by the 1MDB management's action to purposefully stray away from the board of directors' instructions with regard to a US$1 billion transfer meant for the PetroSaudi International JV which ended up being diverted to another company.

As a result, he decided to resign in October 2009, Bakke told the High Court during the examination-in-chief by senior Deputy Public Prosecutor Datuk Seri Gopal Sri Ram.

Bakke, the 13th prosecution witness in Najib and former 1MDB president Arul Kanda Kandasamy's audit tampering trial, explained that the US$1 billion was raised via AmBank issued bonds (Islamic Medium Term Notes amounting to RM5 billion) that were issued sometime between June and July 2009.

However, the board was informed at the Oct 3, 2009 meeting that the management had transferred US$300 million to the JV company — while the remaining US$700 million had ended up with Good Star.

"I recall the managing director Datuk Shahrol [Azral Ibrahim Halmi] informing the board that they had found an agreement with PetroSaudi, and then they had split the remittance into two tranches. One, US$300 million went into the JV account, the 1MDB PetroSaudi JV account, while the balance, US$700 million, went into PetroSaudi International's account.

"Obviously we reacted in a very adverse and angry manner. We said that this was not what the instruction that the board had given to management, and we said how could that have happened in the first place," he said.

Personally, he added that his reaction was anger, followed by suspicion that management was out to do something not in line with the right governance.

"The board's reaction was one of shock, anger and we were flabbergasted. I used this word before [to express myself]," he stressed.

Bakke said the reason that management gave was that it strayed from the instruction and transferred the US$700 million into PetroSaudi International's bank account due to "commercial reasons".

"The explanation given by Shahrol was [that] they were advised by the external lawyers to do this for commercial reasons. That was the explanation given," he said.

The former 1MDB chairman said that at the end of the Oct 3, 2009 meeting, he asked management to leave the room and then subsequently told the board of directors that they should all resign.

At that time, besides Bakke and Azlan, the other board members were Tan Sri Che Lodin Wok Kamaruddin and Tan Sri Ismee Ismail.

He noted that he did not tender his resignation earlier to ensure that the minutes of the Oct 3, 2009 meeting were properly recorded, and only tendered on Oct 19, 2009.

Prior to that, Bakke also verified that Jho Low, along with his known associate Casey Tang who later became a 1MDB director, were present at the board meeting on Sept 26, 2009.

He further explained that Jho Low was supposedly the coordinator and representative of the former prime minister.

"That was the impression and representation made by him and confirmed by other individuals," he said.

Similarly, in the other 1MDB-Tanore trial, witnesses like Shahrol and former 1MDB chief executive officer Mohd Hazem Abdul Rahman had told the court that Jho Low was Najib's representative in the company.

Bakke was also asked by Sri Ram, in his short 90-day tenure with Terengganu Investment Authority that later became 1MDB, if Najib had ever distanced himself from Jho Low and the witness replied in the negative.

Najib is facing a charge of abusing his power to amend the 1MDB report before it was submitted to the Public Accounts Committee to protect himself from disciplinary, civil and criminal actions. Also in the dock is Arul Kanda, who is charged with abetting the former premier.

The charges are framed under Section 23(1) of the MACC Act 2009, which specifies a jail term of up to 20 years and a fine of no less than five times the amount of gratification or RM10,000, whichever is higher.

The hearing is fixed to continue before High Court Justice Mohamad Zaini Mazlan on March 7 next year.