1MDB-Tanore Essay: Unlike Other MoF Companies, 1MDB’s Corporate Structure Was Very Different, Says Husni

ALTHOUGH he was the second Minister of Finance from the creation of 1MDB in 2009 until its disintegration in 2016, Datuk Seri Ahmad Husni Hanadzlah only very late discovered a number of things about 1MDB.

It wasn’t until 2015, when he was tasked with developing a rationalization plan for financially troubled 1MDB, that he realized the public strategic investment company was unique in several ways. .

Earlier in 2010, it was made clear to him that unlike all the companies of the Ministry of Finance Inc which fell under the jurisdiction of the Ministry of Finance, 1MDB – although owned by the MoF Inc – had to come under the supervision of the Cabinet of the Prime Minister (PMO), at the request of then Prime Minister Datuk Seri Najib Razak.

But while working to save 1MDB, he learned that it was also the only company under the Ministry of Finance that had a Board of Advisors (BoA) in its corporate structure.

Additionally, 1MDB’s board of directors had no authority over the company’s investments since that authority was given to its BoA, which was headed by Najib.

Testifying as the 20th prosecution witness in the ongoing 1MDB-Tanore trial last week, Husni said: “I would like to state that to the best of my knowledge, in other MoF Inc companies under the Ministry of Finance, not a single company has a BoA in its business structure like it does in the 1MDB business structure.

“I was also informed that the Prime Minister has full authority to take all decisions of the company. Najib did not tell me further why 1MDB needs to be overseen by the PMO,” Husni said.

Husni, 70, said he served in the finance ministry from 2008, when he was appointed deputy finance minister; about a year later, was appointed second Minister of Finance and served until his voluntary resignation in June 2016.

Husni claimed that early on he did everything he could to warn Najib – his then-boss who also held the finance portfolio – that some of the deals the state-owned strategic investment firm was proposing to do n were not wise and heavy. with danger, only to be rebuffed by Najib, who ordered him to stay out of company business.

Husni said he approached Najib twice in 2009 to express concerns about 1MDB and its proposed deals.

In mid-2009, around the time the federal government was seeking to take control of Terengganu Investment Authority (TIA) and turn it into 1MDB, Husni said he warned Najib that 1MDB should not be created without a “feasibility study”.

Najib, however, insisted that he would go ahead with the plan. “I was calm but I was worried about the future because [1MDB’s] the establishment had no [feasibility] study. It was the SOP. [The company] had no oil or excavation experience. So that’s what worries me. »

The second meeting came after he heard of 1MDB’s proposed joint venture with PetroSaudi International Ltd (PSI) – a deal which left him perplexed as the Saudi company was only at the exploratory stage of searching for oil . “If we don’t find oil, the investment will hangus [burnt]“, he had warned.

Moreover, he pointed out that 1MDB had no experience in the oil and gas field and, if necessary, it made more sense for the national oil company Petroliam Nasional Bhd to be associated with the JV instead.

On this occasion, Najib was more brutal in his rebuff: “Husni, I don’t want you to get involved[d] and interfere [with] 1MDB. »

Afterwards, Husni said that he stayed away from all matters related to 1MDB and was not involved in any decision-making process, nor was he informed of the company’s investments.

In August 2010, Husni decided to reach out to Najib again, but via a private letter sent by Najib’s former principal private secretary, the late Datuk Azlin Alias, in which he expressed concern that business of 1MDB could cause controversy and affect Najib and his government. His letter was met with silence.

“As Minister of Finance II, I took on the responsibility of menegur [reprimand] on matters related to 1MDB,” he said.

Ministers attempted to ‘taiji’ blame 1MDB’s rationalization plan

In early 2015, almost five years later, Najib asked Husni to help 1MDB, but only after it had become infamous and in debt to the tune of billions of dollars.

At first, Husni refused because he had never participated. He asked that the task be given to another minister.

“I did not agree to perform the task as I have never been involved and 1MDB affairs have not been reported to me. I have requested that this task be performed by the Minister within the Department of Prime Minister,” he said.

Najib, however, insisted that Husni saw this through.

Interestingly, Husni said he met then PMO Minister Tan Sri Abdul Wahid Omar and asked him to take over the task instead, but the latter refused.

Husni said he then set to work, along with his private secretary at the time, Imran Yasin Mohd Yusof, on a streamlining plan that included collecting information, including financial reports for the years ended. from March 31, 2010 to March 31, 2014.

Based on the documents he received, he discovered that 1MDB’s debt as of May 20, 2015 was some RM48.57 billion against total assets of RM49.89 billion.

He offered two options for streamlining: either the fund liquidated all of its performing and non-performing assets for a gain of RM3.3 billion, or it monetized all assets except its 30% stake in Edra Energy, its 40% stake in Tun Razak Exchange. (TRX) and a 40% stake in Bandar Malaysia.

The cabinet opted for the second option, he said, and approved it in 2015, although it was up to 1MDB to execute the plan. At that time, it was placed under the leadership of Arul Kanda Kandasamy, President and CEO of 1MDB.

Unaware that funds are paid into Najib’s accounts

Husni also said that when he was Minister of Finance II, he was unaware of the money transaction in Najib’s personal bank account and only found out about it through a 2015 statement. from the Malaysian Anti-Corruption Commission that RM2.6 billion was in Najib’s personal AmBank account. When he asked Najib about it, the former prime minister replied that it was a gift from the Saudi royal family.

As the controversy grew, Najib’s media officer met with Husni and gave him a statement to the media.

Husni said he met with Najib to inquire about the reason for the statement to be released and suggested that Najib provide him with details of the transactions.

” If I understood correctly, [Najib] returned RM2 billion of the amount and only used RM600 million,” he said, adding that he had been told that the RM600 million was used for corporate social responsibility purposes. , but he did not receive further details.

The trial continues before High Court Judge Datuk Collin Justice Lawrence Sequerah next week when Husni is due to be cross-examined.