This article first appeared in The Edge Financial Daily on October 2, 2019 - October 8, 2019

KUALA LUMPUR: 1Malaysia Development Bhd’s (1MDB) loans needed former prime minister Datuk Seri Najib Razak’s approval, ex-1MDB chief executive officer (CEO) Datuk Shahrol Azral Ibrahim Halmi told the High Court here yesterday.

Shahrol said Najib’s approval was needed for the US$250 million (about RM1.05 billion) loan obtained by 1MDB Energy Holdings Ltd, a unit of 1MDB, as well as another US$975 million loan, which was to be used for the buy-back of options granted to Abu Dhabi-based Aabar Investments PJS in 2012.

This was ahead of 1MDB Energy’s planned initial public offering, which eventually fell through, according to the witness.

Shahrol said: “The approval to take on these loans [was given] by Datuk Seri Najib as the shareholder of 1MDB and also on behalf of Minister of Finance Inc.

“This was because all dealings of 1MDB that relate to financial matters would require his approval beforehand, in line with Article 117 of the memorandum and articles of association of 1MDB.”

Senior Deputy Public Prosecutor Datuk Seri Gopal Sri Ram had asked the witness about transactions that involved the borrowing of money by 1MDB and whether these transactions could be pushed through without Najib’s authority.

Shahrol: No.

Sri Ram: That would be out of the question?

Shahrol: Out of the question.

Shahrol also testified about Abu Dhabi Malaysia Investment Co Ltd (Admic), a 50:50 joint venture between 1MDB and Aabar Investments PJS.

“Aabar was supposed to inject US$3 billion into Admic but as far as I know, they never did. This was after I left as CEO as I don’t know the details,” said the witness.

Shahrol said Mohd Hazem Abd Rahman took over as CEO and would know the details.

“Did the accused (Najib) ask you whether the US$3 billion was paid by Aabar?” asked Sri Ram.

“No,” replied Shahrol.

The witness said Najib had never contacted him or other 1MDB board members to discuss the whereabouts of 1MDB’s lost funds after news of the company’s scandal broke in 2014.

Shahrol said that when he left 1MDB’s board, the company had a debt of RM30 million on its balance sheet.

When the news of 1MDB’s scandal went viral in 2015 and 2016, 1MDB board members unanimously proposed their resignations to Najib, but the former premier ordered them to stay on until new members were appointed in 2016, Shahrol said.