KUALA LUMPUR, Sept 15 -- The High Court here today was told that part of the funds from the USD 3 billion in bonds issued by 1Malaysia Development Berhad (1MDB) for the Bandar Malaysia and Tun Razak Exchange (TRX) projects was used for the purchase of land in Ayer Itam, Penang.
Former 1MDB chief executive officer Mohd Hazem Abdul Rahman, 48, said the land purchase was among UMNO's initiatives while campaigning for the 13th General Election (GE-13) in May 2013.
"When former prime minister Datuk Seri Najib Tun Razak attended one of the campaigns in Penang, he stated in a ceramah (campaign speech) that the land purchased would be developed by 1MDB to build an affordable housing project in Ayer Itam, Penang," said the 10th prosecution witness in the case.
Mohd Hazem, who was the CEO and board member of 1MDB from March 2013 to January 2015, said this while reading his witness statement at Najib's corruption case involving RM2.3 billion of 1MDB funds.
When asked by DPP Mohamad Mustafa P. Kunyalam how he knew that 1MDB funds were used to purchase the land, Mohd Hazem replied: "I was present at the ceramah".
Mohd Hazem, however, did not elaborate on the land acquisition.
Meanwhile, he said 1MDB board members had also never agreed for the USD 3 billion in funds to be used to repay the company's debt, and that it was only meant for the Abu Dhabi-Malaysia Investment Company (ADMIC) joint venture and for financing TRX.
"Of the USD 3 billion in bonds issued, only about USD 2.7 billion nett was received by 1MDB's subsidiary, 1MDB Global Investment Limited (1MDB GIL) after deducting all administrative costs, and deposited in 1MDB GIL's account at the BSI Bank (BSI) in Lugano, Switzerland.
“Around March 2013, I was told by 1MDB lawyer Jasmine Loo that the funds will be invested in BSI Singapore. At the time, there was still no need to use the funds because 1MDB did not have any projects to be funded (at the time),” he said.
The witness said he was aware that the decision to invest funds in BSI Singapore had strayed from the original purpose the bonds were issued for.
“The funds were also never handed over to ADMIC. I know this because I know Jasmine's instructions are instructions from wanted businessman, Low Taek Jho or Jho Low, which also came from Datuk Seri Najib," he said.
Mohd Hazem said in September 2013, he had contacted Jho Low to ask for permission to bring back the 1MDB funds kept abroad to finance the acquisition of independent power plant JIMAH Energy Ventures.
“Jho Low, however, informed that the funds cannot be used, because it is for UMNO. After hearing this, I also understood that Datuk Seri Najib was controlling the funds for UMNO.
He said the company then had to source funds for the acquisition through another loan, which frustrated him, and he became concerned about the company's growing debt.
Mohd Hazem said at the time he resigned from 1MDB, there was still money left in the 1MDB GIL account, half of which had been invested by the fund manager at BSI Singapore.
“The money was also used in mid-2013 to purchase Ayer Itam Estate Lands land in Penang for about RM1 billion, repay the debt from Standard Chartered bank of about RM2 billion and may have also been used to pay other loan interests.
"I did not have access and control over the funds even though I was the CEO and I had repeatedly made requests to Jho Low to bring home the funds to finance 1MDB's needs," he said.
According to Mohd Hazem, the response received from Jho Low was that the funds could not be brought home as it was required for UMNO.
“But I was informed by the then 1MDB chairman, Tan Sri Lodin Wok Kamaruddin that Datuk Seri Najib did not allow the funds to be brought home. Although no clear reason was given, I had to abide by this because it came from Datuk Seri Najib.
"So I understood that indeed, all these matters were in his (Najib's) knowledge, and I had to comply with the instructions," he said.
Najib, 67, is facing four charges of using his position to obtain gratification amounting to RM2.3 billion in 1MDB funds, and 21 counts of money laundering involving the same amount.
The trial before Judge Collin Lawrence Sequerah continues.
Malaysian National News Agency
No.28 Jalan BERNAMA
Off Jalan Tun Razak
50400 Kuala Lumpur
Tel : +603-2693 9933 (General Line)
Email : helpdesk[at]bernama.com