KUALA LUMPUR: The purported multi-billion joint venture agreement between 1Malaysia Development Berhad (1MDB) and PetroSaudi International Ltd (PSI) was purely a scam, the High Court heard today.
Former 1MDB general counsel Jasmine Loo Ai Swan made this statement in response to a suggestion by lawyer Tan Sri Muhammad Shafee Abdullah during today's proceedings.
Loo also agreed with Shafee's contention that it was not the duty of former prime minister Datuk Seri Najib Razak to ascertain that PSI was an authentic company registered in Saudi Arabia.
The former lawyer said this when testifying in Najib's corruption trial for misappropriating millions of 1MDB funds before presiding judge Datuk Collin Lawrence Sequerah.
It was revealed during the trial that former 1MDB chief executive Datuk Shahrol Azral Ibrahim Halmi former chief executive admitted that he relied heavily on representations made by PSI itself before entering into a joint venture agreement (JVA with its holding company called PetroSaudi Holdings (Cayman) to form 1MDB PetroSaudi Ltd.
Under the JVA, which was signed on Sept 28, 2009, 1MDB ended up pumping in US$1 billion for a 40 per cent stake in the company while PetroSaudi Holdings (Cayman) injected its so-called assets worth US$2.7 billion for a 60 per cent stake.
According to the prosecution's case, a fraudulent JVA between 1MDB and PSI, known as the Aria project, was established by the accused (Najib), with 1MDB purportedly borrowing US$1 billion to invest in 1MDB PetroSaudi Ltd.
Loo also agreed with Shafee's suggestion that 1MDB's top brass should have conducted due diligence on PSI before pumping its fund into the JVA.
She said her knowledge regarding PSI at that time was solely based on documents provided, such as letters from the bank and information from Shahrol Azral.
Shafee: Is it the duty of the prime minister to ascertain whether PSI actually exists in Saudi Arabia?
Loo: No.
Shafee: Is it the duty of 1MDB's management or Wong & Partners (consulting company)?
Loo: Yes, One of them.
Shafee: Including you, because you were paid a lot.
Loo: Yes.
On Nov 1, 2018, former PetroSaudi executive officer Xavier Andre Justo claimed that the JVA was purposefully done to steal money.
"The company was created by Tarek Obaid, one of my very best friends in 2005. This company has only one good asset... the name. It sounds like a Saudi government company.
"But from 2006 until the 1MDB money went into the PetroSaudi account, it was almost a non-existence company.
"In Geneva, they were hiring a part-time employee. I know that because he was stationed in my office.
"In Saudi Arabia, which was supposed to be the center of the business, there was only one guy picking up the phone while in London, three oilmen were paid part-time.
"So, the company almost did not exist until September 2009 when they did this famous joint venture with 1MDB," he added.