KUALA LUMPUR, Sept 14 — 1Malaysia Development Berhad (1MDB) CEO Mohd Hazem Abd Rahman today told the court that he had felt something was wrong with how the company’s purported funds located overseas were handled, but said he did not report this to the authorities due to various concerns and fears.
Mohd Hazem said this while testifying as the 10th prosecution witness in former finance minister Datuk Seri Najib Razak’s power abuse and money-laundering trial over more than RM2 billion of 1MDB funds.
Mohd Hazem, who was 1MDB’s CEO from March 2013 to 2015, said he felt pressure to make decisions over the company’s investments and loans, noting 1MDBs problematic finances as it had taken on too many domestic and foreign debts based on Low Taek Jho’s plans that he felt could never be repaid.
Besides worrying about the unclear status of 1MDB’s investments, Mohd Hazem said he had as CEO also worried over the company’s operations as it had run out of funds within Malaysia while its funds purported to be abroad could not be brought back to pay for the company’s debts and projects here.
Even as the 1MDB CEO, Mohd Hazem said he had “no control and no knowledge at all” of the status of the company’s overseas funds, and said he had worried over whether such funds could be brought back when the company needs to pay for its operations.
Mohd Hazem said that Low Taek Jho — who he described as Najib’s trusted right-hand man and proxy for 1MDB affairs — had instructed for matters relating to overseas fund-raising and investments to be handled by Low’s alleged own proxies in 1MDB — Jasmine Loo and Terence Geh.
“What I was afraid was that the funds abroad have been used without the knowledge of the 1MDB management and board of directors. If the funds were used for other purposes apart from approval given by the board of directors and Datuk Seri Najib, it is against the law and will affect 1MDB,” he said, adding that he had however raised his concern several times to Najib’s then principal private secretary Datuk Azlin Alias.
Mohd Hazem said he had also asked 1MDB board of directors’ then chairman Tan Sri Lodin Wok Kamaruddin to bring the matter to Najib’s attention, but was told in 2014 that Najib had informed Lodin that the overseas funds could not be brought back even as 1MDB faced constraints in repaying a RM2.5 billion debt to Maybank then.
Mohd Hazem said that this was contrary to business ethics where a company that needs funds should prioritise using existing funds held in the company’s accounts, instead of selling of assets or raising funds by taking on more debts.
“I felt that there was something that was not right regarding the management of 1MDB’s funds abroad, but I did not have the power to know about the status of such funds as the power and orders are direct from Datuk Seri Najib.
“I have never reported this matter to the authorities to be investigated as I respect and fear Datuk Seri Najib as the prime minister of Malaysia who is the sole shareholder and holder of the absolute power in 1MDB, and I was also afraid that my career will be affected, although at the same time I raised worries regarding MOF Inc that was the guarantor for 1MDB’s loans,” he said.
Mohd Hazem explained that the Finance Ministry-owned MOF Inc’s role as guarantor meant that the Malaysian government will have to bear 1MDB’s debts if the company fails to pay them, which he said would in turn affect the country’s economy and the public.
The court has previously heard testimony that showed that much of 1MDB’s funds that were alleged to be overseas at that time were actually raised through the company borrowing money and taking on debts, and that a substantial part of such funds were diverted to fake companies and eventually went missing.
Najib’s trial before High Court judge Collin Lawrence Sequerah resumes tomorrow, with Hazem expected to continue testifying.
MORE TO COME