1MDB funds used to purchase land in Penang for low-cost flats, says witness

Former 1MDB CEO Mohd Hazem Abdul Rahman told the Court that the state investment arm had never discussed the purchase of land in Penang in any meeting.

KUALA LUMPUR: Former 1MDB CEO Mohd Hazem Abdul Rahman told the High Court in Najib Razak’s trial that part of the US$3 billion raised for the Tun Razak Exchange (TRX) and Bandar Malaysia projects was instead spent on the purchase of land in Ayer Itam, Penang for building low-cost flats.

He said that during the 2013 general election campaign, the former prime minister had announced that the land will be developed by 1MDB.

“The funds generated from the US$3 billion bonds had been spent as part of an initiative by Umno for their election campaign.

“However, we (1MDB) had never discussed this Penang land purchase in our meetings. The funds were meant for TRX,” Hazem said.

The witness added that after taking charge in 1MDB, he became aware that the projects he was assigned to were merely “vehicles” for fundraising purposes.

Hazem also testified that these projects were planned by fugitive businessman Low Taek Jho (Jho Low).

The court heard that Goldman Sachs assisted 1MDB’s subsidiary company 1MDB Global Investment Ltd to raise the US$3 billion through the issuance of bonds.

Hazem told the court today that 1MDB received US$2.71 million from the bonds, with the remainder paid to Goldman Sachs to cover their fees and other costs.

Besides the Ayer Itam land, he said part of the US$2.71 billion raised was also used to pay 1MDB’s debt with Standard Chartered, which amounted to RM2 billion.

“Sometime in March 2013, Jasmine (Loo Ai Swan) told me that the funds will be invested at BSI Bank Singapore,” he said, referring to the then 1MDB general counsel.

Earlier today, Hazem said that Low had also suggested to 1MDB Global Investment to open an account with BSI Bank in 2013, so that the money raised from the bonds could be deposited there.

He added the account opening process was done through Loo, while Low told him and chief financial officer, Azmi Tahir to be the account’s signatories.

“I need to put on record that Azmi and I were merely signatories to the bank accounts and company documents while Jasmine and Terence (Geh Choh Heng) were the ones running the show,” he said, referring to the company’s executive director of finance.

The witness added that Loo informed him that the money kept in BSI Bank will be invested into three fund companies namely, Devonshire Capital Growth Fund, Enterprise Emerging Market Fund and Cistenique Investment Fund.

Hazem also said in September 2013, 1MDB wanted to purchase an independent power producer from an energy company, Jimah Energy Ventures Sdn Bhd, and that it would have cost the company about RM1 billion.

“I contacted Jho Low, telling him that we needed to have the funds from overseas for Jimah. He told me that the money cannot be touched as it was Umno funds.

“After hearing this, I understood that Datuk Seri Najib controls the finance for Umno,” he said.

Najib was slapped with 25 charges for abuse of power and money laundering over alleged 1MDB funds amounting to RM2.28 billion deposited into his AmBank accounts between February 2011 and December 2014.

The hearing continues before High Court judge Collin Lawrence Sequerah.