Bakke did not inform Najib of resignation in person as he suspected the former PM had 'personal interest' in US$1b misappropriation

Tan Sri Mohd Bakke Salleh (Photo by Low Yen Yeing/The Edge)

Tan Sri Mohd Bakke Salleh (Photo by Low Yen Yeing/The Edge)

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KUALA LUMPUR (May 18): 1Malaysia Development Bhd's (1MDB) former chairman Tan Sri Mohd Bakke Salleh told the High Court on Wednesday (May 18) that he decided to only send a text message to former prime minister Datuk Seri Najib Razak to inform him of his resignation from the board in 2009 as he suspected the latter had personal interest in a sham US$1 billion investment that the government-owned company had committed to.

Testifying at the 1MDB-Tanore trial before Justice Datuk Collin Lawrence Sequerah in which Najib is the only accused, Bakke said that he had thought better of meeting Najib in person to tell him of his resignation and the reasons for his resignation.

Under cross-examination from Najib's lawyer Tan Sri Muhammad Shafee Abdullah, Bakke said that he was not comfortable to see Najib in person or to speak with him because he suspected that Najib was part of the "scheme of things" in 1MDB.

In 2009, Najib and financier Low Taek Jho, or Jho Low, moved for 1MDB to enter into a 40:60 joint venture (JV) agreement with PSI, purportedly as a government-to-government initiative.

The JV company, named 1MDB-PetroSaudi Ltd, involved 1MDB undertaking an equity investment of US$1 billion while PSI would inject US$1.5 billion worth of assets.

However, after the JV agreement was signed, PSI said its US$1.5 billion asset injection into the JV company entailed a US$700 million advance for 1MDB, which meant 1MDB owed PSI.

Through the instructions of former 1MDB chief executive officer Datuk Shahrol Azral Ibrahim Halmi, 1MDB had diverted US$700 million from the US$1 billion JV equity investment into an account belonging to Good Star Ltd, on grounds that PSI said Good Star was its affiliate.

The money was then siphoned off by Jho Low to pay bribes and kickbacks to many overseas and local officials including Najib.

Bakke said previously that he had wanted to resign because of the way 1MDB management had done the deal to remit the US$700 million to a different entity in Good Star.

Bakke, along with board member Tan Sri Azlan Mohd Zainol, resigned in protest over the remittance of the funds. Bakke left on Oct 19, 2009, and Azlan, about three months later on Jan 11, 2010.

Previously, Bakke testified that just before the start of a board meeting on Sept 26, 2009, Jho Low had passed his phone to Bakke as Najib was on the line. Najib instructed Bakke to "firm up" on a decision as he said that the JV deal had been ongoing for some time, and that it was a government-to-government initiative and that he wanted to witness the signing ceremony of the deal with PSI's co-founder Prince Turki Abdullah by the end of September.

At the trial on Wednesday (May 18), Bakke said that he did not suspect that the management was involved in purported criminal activities but rather was frustrated with them for their defiance of the board.

Shafee: They (Shahrol, former 1MDB executive director Casey Tang and others) were doing this on their own... that the PM was being a puppet master you have no such evidence whatsoever.

Bakke: I didn't really feel comfortable enough... that was the decision I took.

Bakke, who is currently Petroliam Nasional Bhd's chairman, testified previously that he had sent a text message to Najib to inform him of his resignation but he did not receive a reply.

Shafee: On the other hand, you had voluminous suspicions about the management... real reasons [to suspect them] but you sulked (merajuk) with the PM, saying 'I don't want to see the PM'.

Bakke: Sulked (merajuk) is the wrong choice of word... you can say whatever you like.

Shafee: [You didn't see the PM and say] if you didn't seize it (the opportunity to inform him of the misappropration) now, it would go down the drain. Instead, you sent an SMS that might or might not reach him... an unreasonable action by a chairman.

Bakke: No comment.

After this exchange, Bakke addressed Judge Datuk Collin Lawrence Sequerah and quipped that Shafee was taking him on a "roller-coaster ride" and going back to the same point.

Shafee then moved on to ask him if he was aware that the board was involved in "criminal offences".

Bakke said he disagreed with Shafee's assessment.

"I disagree because I was not in [a] position to know if any offence had been [committed]. Management had not followed instructions, then justified it [by saying it was] advised by external lawyers," he said.

He said that the remittance was also subject to the approval of Bank Negara Malaysia (BNM). Bakke said if there were any offences done through the remittance, BNM would have flagged it.

In the 1MDB-Tanore trial, Najib is charged with four counts of abuse of power in enriching himself with RM2.3 billion of 1MDB funds and 21 counts of money laundering of the same amount. He could face a fine and up to 20 years' imprisonment if convicted.

The Edge is covering the trial live here.

Users of The Edge Markets app may tap here to access the live report.

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