This article first appeared in The Edge Malaysia Weekly on June 13, 2022 - June 19, 2022

ALTHOUGH he was the second finance minister from the time 1MDB was established in 2009 until its disintegration in 2016, Datuk Seri Ahmad Husni Hanadzlah only very belatedly discovered a number of things about 1MDB.

Only in 2015, when he was tasked with coming up with a rationalisation plan for financially strapped 1MDB, did he realise that the state-owned strategic investment company was unique in several aspects.

Earlier in 2010, he had been given to understand that unlike all the Minister of Finance Inc companies that came under the finance ministry’s purview, 1MDB — although owned by MoF Inc — was to come  under the supervision of the Prime Minister’s Office (PMO), as per the request of the then prime minister Datuk Seri Najib Razak.

But on working to salvage 1MDB,  he learnt that it was also the only company under the Ministry of Finance that had a board of advisers (BoA) in its company structure.

Moreover, the board of directors of 1MDB had no authority over the company’s investments as such authority was given to its BoA, which was headed by Najib.

Testifying as the prosecution’s 20th witness in the ongoing 1MDB-Tanore trial last week, Husni said: “I would like to state that, to my knowledge, in other MoF Inc companies under the Ministry of Finance, not a single company has a BoA in its company structure as is the case in the 1MDB company structure.

“I was also informed that the prime minister has full authority in making any company decisions. Najib did not tell me further why 1MDB needs to be supervised by the PMO,” Husni said.

Husni, 70, said he served in the Ministry of Finance from 2008, when he was appointed deputy finance minister; about a year later, was made second finance minister and served until he resigned voluntarily in June 2016.

Husni claimed that very early on, he had done everything he could to caution Najib — his then boss who was also holding the finance portfolio — that some of the deals that the state-owned strategic investment company was proposing to do were not wise and fraught with danger, only to be rebuffed by Najib, who instructed him to keep out of the company’s affairs.

Husni said he had twice approached Najib in 2009 to voice his concerns over 1MDB and its proposed dealings.

In mid-2009, around the time when the federal government was looking to take over Terengganu Investment Authority (TIA) and turn it into 1MDB, Husni said he cautioned Najib that 1MDB should not be established without a “feasibility study”.

Najib insisted, however, that he would continue with the plan. “I was calm but I was worried about the future because [1MDB’s] establishment didn't have a [feasibility] study. That was the SOP. [The company] had no experience in petroleum or excavation. So, that is what is worrying to me.”

The second meeting was after he got wind of 1MDB’s proposed joint venture with PetroSaudi International Ltd (PSI) — a deal that perplexed him as the Saudi company was only at the exploratory stages of looking for oil. “If oil is not found, the investment will be hangus [burnt],” he had cautioned.

Moreover, he pointed out that 1MDB had no experience in the area of oil and gas and, if necessary, it made more sense for national oil company Petroliam Nasional Bhd to be roped into the JV instead.

On this occasion, Najib was more blunt in his rebuff: “Husni, I don’t want you to get involve[d] and interfere [with] 1MDB.”

Subsequently, Husni said he stayed clear of all 1MDB-related matters and was not involved in any decision-making process, nor was he informed of the company's investments.

In August 2010, Husni decided to reach out again to Najib, but via a private letter sent through Najib's former principal private secretary, the late Datuk Azlin Alias, wherein he voiced his concerns that 1MDB’s affairs could court controversy and affect Najib and his government. His letter was met with silence.

“As minister of finance II, I took the responsibility to menegur [reprimand] on affairs related to 1MDB,” he said.

In early 2015, almost five years later, Najib asked Husni to help 1MDB — but only after it had become infamous and debt-laden to the tune of billions of dollars.

At first, Husni refused as he had never been involved with it. He asked for the task to be carried out by another minister.

“I did not agree to perform the task because I was never involved and 1MDB affairs were not reported to me. I asked for this task to be done by the minister in the Prime Minister's Department,” he said.

Najib insisted, however, that Husni saw this through.

Interestingly, Husni said he had met with then minister in the PMO Tan Sri Abdul Wahid Omar and asked him to take over the task instead, but the latter refused.

Husni said he then set to work, together with his then private secretary Imran Yasin Mohd Yusof, on a rationalisation plan that included gathering information, including financial reports for the years ended March 31, 2010, to March 31, 2014.

Based on the documents he received, he discovered that 1MDB's debt as at May 20, 2015, amounted to some RM48.57 billion against total assets of RM49.89 billion.

He proposed two options for the rationalisation: either the fund liquidated all of its productive and unproductive assets for a gain of RM3.3 billion, or it monetised all assets except for its 30% stake in Edra Energy, 40% stake in Tun Razak Exchange (TRX) and 40% stake in Bandar Malaysia.

The cabinet opted for the second option, he said, and had approved it in 2015, although it would be up to 1MDB to execute the plan. At that point, it was put under the leadership of Arul Kanda Kandasamy, president and CEO of 1MDB.

Husni also testified that while he was minister of finance II, he was unaware of the transaction of monies into Najib’s personal bank account, and found out about it only through a 2015 statement by the Malaysian Anti-Corruption Commission that said RM2.6 billion had gone into Najib’s personal AmBank account. When he asked Najib about it, the former premier replied that it was a donation from the Saudi royal family.

As the controversy grew, Najib’s media officer met with Husni and gave him a statement for the media.

Husni said he met with Najib to inquire about the reason behind the statement to be issued and suggested that Najib furnish him with details of the transactions.

“As I understood it, [Najib] had returned RM2 billion of the amount and had only used up RM600 million,” he said, adding he was told that the RM600 million was used for corporate social responsibility purposes, but he was not given further details.

The trial continues before High Court judge Justice Datuk Collin Lawrence Sequerah next week, when Husni is slated to be cross-examined.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.