PUTRAJAYA (Oct 23): Datuk Seri Najib Razak’s defence team contended in the High Court on Thursday that 1Malaysia Development Bhd's (1MDB) decision to enter into a US$2.5 billion joint venture with PetroSaudi International Ltd (PSI) in 2009 was not due to the now-disputed phone call between Najib and the company’s then-chairman, Tan Sri Mohd Bakke Salleh.

This is because 1MDB's management and board of directors had already shown clear intent to proceed with the joint venture before any such conversation took place, Najib's lawyer Wan Azwan Aiman Wan Fakhruddin told the court in his closing submission in the 1MDB-Tanore trial.

“The contemporaneous records show that the management and board were already taking active steps in finalising and working towards the realisation of the partnership with PSI,” Wan Azwan said.

“This included appointing corporate representatives and even opening a joint bank account with PSI — all of which points to a board that was operationally ready and eager to move forward,” he further submitted before Justice Collin Lawrence Sequerah.

Wan Azwan Aiman argued that the notice of the special board meeting, dated Sept 25, 2009, indicated that the meeting the following day was specifically convened to approve the venture with PSI, contradicting Bakke's assertion that the JV would not have proceeded without the brief telephone conversation with Najib.

He also challenged the notion of a prime ministerial directive by asking, “The greater question is, if the board of directors was directed by the Prime Minister himself, how dare they impose prerequisites before agreeing to enter into the joint venture?”

The issue revolves around a phone call that purportedly occurred just before 1MDB’s board meeting on Sept 26, 2009. Bakke previously testified that the call came through a mobile phone handed to him by fugitive financier Low Taek Jho, better known as Jho Low, who was then acting as an intermediary.

Bakke claimed that Najib, who was both prime minister and finance minister at the time, had directly urged him to expedite approval of 1MDB’s US$1 billion investment in the JV with PSI. Najib had allegedly described the deal as a government-to-government initiative that would strengthen ties between Malaysia and Saudi Arabia.

Following the call, Bakke had informed other board members that Najib was aware of the matter and wanted a swift decision. The board subsequently approved the JV that day.

Najib’s defence, however, is arguing that the call had no real influence on the board’s decision-making. “The fact that the board still imposed conditions before signing on the deal shows that it was not a rubber stamp,” Wan Azwan said.

“It was palpable that whatever ‘direction’ Tan Sri Bakke received was not even acted upon by 1MDB’s board of directors. Ultimately, they retained their authority and free rein to decide on what was best for 1MDB and imposed preconditions and prerequisites before participating in the JV with PSI,” Wan Azwan said.

He further submitted that regardless of the phone call, 1MDB's board and management were already determined to pursue the JV. “From the preceding events and the conduct of the management and board of Directors of 1MDB, it was doubtful that it was Datuk Seri Najib’s conversation with Tan Sri Bakke that caused the board of directors to participate in the JV with PSI; they were keen all along,” he said.

Despite the board’s approval, Bakke resigned from 1MDB less than two weeks later, citing discomfort with how management proceeded with the JV. He later told the court that the company did not comply with certain conditions imposed by the board, including the need for a proper valuation of PSI’s assets before funds were transferred.

In this trial, Najib, 72, is facing four charges of abusing his position to obtain RM2.3 billion in 1MDB funds between 2011 and 2014. He has been charged under Section 23(1) of the Malaysian Anti-Corruption Commission (MACC) Act, which carries a maximum penalty of 20 years in prison and a fine of five times the amount of gratification received, or RM10,000, whichever is higher.

Closing submissions are set to continue on Friday.