I wanted to quit as I had no control of company finances, says ex-1MDB CEO

Former 1MDB CEO Hazem Abdul Rahman says he was worried about 1MDB’s financial position in 2014 and its ability to service a Maybank loan taken in 2012.

KUALA LUMPUR: Former 1MDB CEO Mohd Hazem Abdul Rahman told the High Court in Najib Razak’s trial that he resigned in 2015 because he felt he had no control over the company’s financial matters.

He said he expressed his intention to leave to Najib’s principal private secretary Azlin Alias and then colleague Azmi Tahir, about a year before his official resignation.

“As CEO and head of management, I should have full control over 1MDB’s funds that were in and outside of Malaysia.

“But Jho Low told me not to disturb the funds overseas,” he said, referring to fugitive businessman Low Taek Jho.

Azmi was 1MDB’s chief financial officer at the time.

The witness added that he was worried about 1MDB’s financial position in 2014, and doubted the company’s ability to service a Maybank loan, taken in 2012, to purchase Tanjong Energy Sdn Bhd’s independent power producer (IPP).

Hazem said after buying both Tanjong Energy and Genting Sanyen Sdn Bhd’s IPPs, the company bought another IPP company, Jimah Energy Ventures Sdn Bhd.

“The Jimah and TRX (Tun Razak Exchange) projects were funded through new loans.

“I don’t know if the money, approximately US$3.8 billion that we had outside of Malaysia was still around or if it had been spent for Umno,” Hazem said, adding only Low and then 1MDB general counsel (Jasmine) Loo Ai Swan had control of the funds kept abroad.

According to Hazem, Azlin had advised him against quitting and to wait until 1MDB’s subsidiary company was listed on Bursa Malaysia.

“After I came home from performing haj in October 2014, I told Datuk Azlin and Jho Low that I was firm about leaving and asked them to find my successor.

“All my subordinates refused to replace me because this CEO role is prone to political exposure,” Hazem said.

He told the court on Jan 5, 2015, Arul Kanda Kandasamy clocked in as 1MDB president.

“It was the right time for me to leave officially as the president’s portfolio is the same as the CEO’s,” Hazem said.

On the planned public-listing of a 1MDB subsidiary, Hazem said that it failed to materialise because of bad press and anchor investors, such as the Employees Provident Fund, not supporting the move.

“Business publications gave negative views on 1MDB and that subsequently influenced prospective investors.”

Hazem also highlighted the purported US$1.15 billion payment made to Aabar Investment PJS was to extend the security deposit period as Aabar had guaranteed 1MDB bonds for the purchase of the Tanjong Energy and Genting Sanyen IPPs.

He said 1MDB paid US$1.43 billion as security deposit in 2012 and the purported US$1.15 billion was paid as “top-up collateral”, in extending the first payment (US$1.43 billion).

Hazem also testified on how then executive director Terence Geh Choh Heng had passed many documents for him to sign on the security deposit after he came back from Mecca.

“I believed Terence took advantage of me by passing me a lot of documents to sign because he did not want me to ask questions.

“I was not aware that the two Deutsche Bank loans (US$1.23 billion) were used for this ‘top-up collateral’, as the original intention was to buy Aabar’s 49% shares in both 1MDB Energy Ltd and 1MDB Energy (Langat) Sdn Bhd,” he said.

The hearing continues before High Court judge Collin Lawrence Sequerah.

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.