How easy was it to fool Najib in the PetroSaudi investment deal?

According to ex-PM Najib Razak’s latest defence strategy, the 1MDB management duped him into agreeing to an investment deal with a business partner, PetroSaudi International Limited (PSI).

The High Court is hearing Najib’s defence lawyers and their witnesses on how the con job unravelled, without Najib smelling the fishy deal.

Ismee Ismail, a former non-executive director of 1MDB said he agreed with Najib’s senior attorney Shafee Abdullah’s suggestion that it was all a con job.

He also confessed that various members of the management had misled Najib and the board by developing elaborate plans to invest in the deal.

Former general counsel Jasmine Loo, former chief financial officer Azmi Tahir, former executive director Casey Tang, and former CEO Shahrol Azral Ibrahim Halmi, according to the lawyer, developed the ideas.

Interrogating the witness, Najib’s lawyer, Shafee said, “This is a 100% con job. All the proposals were crafted by the 1MDB management. It was detailed crafting by the management.”

The witness agreed, saying ‘yes’, to which the Senior counsel asked the witness whether the con was a very detailed piece of paperwork that was convincing enough for the board. “Do you agree with me?”

Explaining further on the conversion to the Murabahah notes, Shafee told the court that the 1MDB management did a “magic show”, whereby the sovereign wealth fund would get the US$1.2 billion on paper, but not the actual cash.

As for Ismee, he says from Shahrol Azral’s (former 1MDB CEO) testimony, “we got to know that he was being directed by fugitive businessman Low Taek Jho, better known as Jho Low, purportedly it was from Najib to do this (proposals).”

The senior counsel was referring to the deal where 1MDB agreed to convert its 40% stake in the 1MDB-PSI joint venture company that it had bought at US$1 billion into an Islamic loan to the same joint venture company.

The Islamic loan via Murabahah notes to the joint venture company was valued at US$1.2 billion.

The joint venture business would owe US$1.2 billion to 1MDB following the conversion to Murabahah notes, essentially delivering 1MDB a paper profit of US$200 million after accounting for the original US$1 billion.

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