KUALA LUMPUR (Jan 5): Despite not having any business affiliation with 1Malaysia Development Bhd (1MDB), Good Star Ltd — an outfit linked to fugitive Low Taek Jho (Jho Low) — received close to US$1.03 billion from the troubled strategic development company between 2009 and 2011.
Malaysian Anti-Corruption Commission (MACC) investigating officer (IO) Nur Aida Arifin told the High Court this on Friday while testifying as the prosecution's 49th witness in the ongoing 1MDB-Tanore trial.
The IO testified that Good Star received the sum in about two years from September 2009 to October 2011. She added that this sum came from the US$1.83 billion that 1MDB released to PetroSaudi International Ltd (PSI) through murabaha notes. The prosecution had stated that these notes ended up being "worthless pieces of paper".
"In fact, only US$800 million of the money was transferred to the joint-venture (JV) company, while the rest of the US$1.03 billion was transferred to the account of Good Star owned by Jho Low, [which had] no business relationship with 1MDB," Nur Aida said.
As reported previously, Good Star was incorporated in Seychelles on May 18, 2009, mere months before the parties entered into a JV agreement. The offshore entity was falsely described as a wholly owned subsidiary of PSI, when Jho Low was in fact its beneficiary.
On Friday, Nur Aida testified that Good Star closed its bank account with RBS Coutts on Sept 4, 2013, and the company was dissolved on May 2, 2014.
1MDB borrowed US$1 billion to invest in the JV called 1MDB PetroSaudi Ltd. PSI was to take up 60% of the shares in the JV by injecting certain assets, while the US$1 billion was 1MDB's contribution for its 40% shareholding.
The IO testified on Friday that even six months into the JV, no activities or projects were implemented by the JV.
The JV agreement was then terminated in March 31, 2010, and 1MDB signed a share sale agreement to sell equity holdings in the JV for US$2 billion through murabaha note subscription. 1MDB also gave the option of offering up to US$1.5 billion in additional loans to PSI.
On the stand, the IO went on to add that towards the end of 2011, issues arose relating to 1MDB's investments of US$1.83 billion with PSI.
"Among the issues was that there were no physical assets and no profits generated for 1MDB," she said, adding that the investments made by 1MDB were only transactions on paper without any assets.
A proposal was then made to the board of directors to terminate the murabaha facility agreement with the proposed repayment and termination of the murabaha note financing agreement, in order to preserve the government-to-government relationship between Malaysia and Saudi Arabia.
In this trial, former prime minister Datuk Seri Najib Razak faces four counts of abuse of power and 21 counts of money laundering of RM2.27 billion of 1MDB funds.
The trial before judge Datuk Collin Lawrence Sequerah continues next Monday, with Nur Aida still on the stand.
The Edge is covering the trial live here.
Users of The Edge Markets app may tap here to access the live report.
Read also:
Najib’s yacht meeting with Tarek Obaid, Jho Low not done through proper diplomatic channel, says MACC investigating officer
Najib not satisfied with Tuesday’s media headings, lawyer threatens contempt proceedings
MACC IO tells court Najib used his position to receive RM3.6 bil in gratification