(Updated)

Bakke, Shafee get into heated argument over PAC report on 1MDB

Bakke as seen at the Kuala Lumpur Court Complex on Tuesday (May 17). (Photo by Low Yen Yeing/The Edge)

Bakke as seen at the Kuala Lumpur Court Complex on Tuesday (May 17). (Photo by Low Yen Yeing/The Edge)

-A +A

KUALA LUMPUR (May 17): 1Malaysia Development Bhd’s (1MDB) former chairman Tan Sri Bakke Mohd Salleh told the court on Tuesday (May 17) that a lot of what he said when he testified before the Public Accounts Committee’s (PAC) investigation into 1MDB in 2016 was not stated in the final report.

Testifying at the 1MDB-Tanore trial before Justice Datuk Collin Lawrence Sequerah where former prime minister Datuk Seri Najib Razak is the only accused, Bakke got into a heated argument with Najib’s lawyer Tan Sri Muhammad Shafee Abdullah for "putting words" in his mouth.

Shafee asked Bakke about his exit from the 1MDB board in October 2009 where Bakke is reported to have said he would not have resigned had the management been transparent with him over issues concerning 1MDB, namely the joint venture (JV) between 1MDB and PetroSaudi International Ltd (PSI).

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

The JV company (JVCo), 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 JVCo 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 the 1MDB management had remitted the US$700 million to Good Star rather than as instructed by the board.

Things got heated between the two men during the cross-examination.

Shafee: You also said that with the benefit of hindsight, that you also lost your cool [and were] flabbergasted with the management of 1MDB who did not follow instructions of the board, you said: “With the benefit of hindsight, I ought not to resign that fast in 1MDB.”

Bakke: No! I did not say that, you are putting words in my mouth. I don’t know where you plucked that [from]. I only said before that with the benefit of hindsight I should not have taken the role at 1MDB.

Shafee: I may be older than you but I am sure you said this. Don’t run my question for me!

Shafee then asked him about the PAC report on 1MDB in 2016, where he was called in by the PAC as a witness in its probe into 1MDB’s management and investment activities. Audit firms Deloitte and KPMG, Bakke’s successor as chairman, Tan Sri Lodin Wok Kamaruddin, and former 1MDB CEOs Arul Kanda Kandasamy and Shahrol were also called up before the bipartisan parliamentary committee.

Shafee: Do you stand by what you said in the PAC hearing?

Bakke: Can I say something? I cannot answer.

Shafee: Answer my question, you are not running a Petronas board!

Bakke, who is currently chairman of the board in Petronas, then said that the PAC report on 1MDB did not contain all of his comments on the issues going on at 1MDB at the time.

He said that the PAC omitted many things he had told them when the committee released its final report.

Bakke: I stand by what I said. When I read the PAC report, a lot of what I said was not reported. I spelt out the four conditions (which the board gave the management of 1MDB to fulfil before going through with the JV), [one of them] was not mentioned in final PAC report. How it was recorded and the way it was recorded, I had no control. What you read in PAC report is not what happened in [the] PAC [proceedings]. The way my testimony was written in the PAC report ... I had no oversight. It doesn't mean what you read in the PAC report represented what I said in the session.

Shafee: Would you agree with me [on] what was recorded and you stand by it?

Bakke: I have no power [over] what was released [in the PAC report]. If what was said was simply recorded, then this would not happen. The most critical condition was not mentioned [in the report].

Shafee: You seem to have been very defensive, I haven’t even asked you the [full] question. Are you even aware you’re not the accused person here? I never asked the question and you’re giving an answer.

Bakke responded that he just wanted to explain his point of view and where he was coming from.

Justice Sequerah then interjected, asking Bakke to reply to Shafee's question, adding that Bakke would be given an opportunity to put things into his perspective during re-examination.

Previously, in the 1MDB audit tampering trial where Bakke had also testified against Najib. He had said: "When you look back and trace everything ... with the benefit of hindsight ... I should not have even accepted to be on the board of 1MDB."

Bakke testified that prior to this JV being agreed upon, the board had laid out four conditions — including due diligence on the deal and an independent valuation of the assets to be injected into the JV — that the management had to fulfil before committing 1MDB to the JV with PSI. However, the management led by Shahrol had not adhered to the conditions.

In the 1MDB-Tanore trial, Najib has been 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.

Read also:
Former 1MDB CFO: Najib never reprimanded me over irregularities but extended my contract