KUALA LUMPUR (April 1): Defence lawyer Tan Sri Muhammad Shafee Abdullah has accused former 1Malaysia Development Bhd (1MDB) general counsel Jasmine Loo Ai Swan of giving “self-serving” testimony, on the witness stand in the 1MDB-Tanore trial on Monday, to save herself, fugitive Low Taek Jho (Jho Low), and other associates.

Loo, the prosecution's 50th witness who was subject to cross-examination by the lawyer representing former prime minister Datuk Seri Najib Razak, was asked about the inner workings of 1MDB, specifically a sham murabaha financing agreement worth US$1 billion (RM4.70 billion) in a joint-venture (JV) company called 1MDB PetroSaudi Ltd, which was eventually siphoned out to shell companies run by Jho Low and his associates.

Loo maintained that at the time of these transactions taking place in 2010 to 2011, she had just entered the company as a general counsel, and had very little knowledge of the transactions.

Shafee: Your claim is self-serving, as you yourself have been under severe investigation, and this [response] is self-serving to save yourself, Jho Low, and other associates.

Loo: I disagree, as I am telling the court what transpired.

Earlier in the trial before judge Datuk Collin Lawrence Sequerah, Shafee claimed that PetroSaudi International Ltd (PSI) did not exist in Saudi Arabia, and that Loo did not do her due diligence as a general counsel to ascertain this fact.

Loo responded by saying that this was work that was done by 1MDB since 2009, and that the then management should have done their due diligence, as she had just entered the company.

"I relied on the work that had already been [carried out], and the signed agreements that had already taken place," she said.

However, Shafee countered this by saying that there are many “conmen” in the world, and therefore Loo should have done her own separate due diligence on this matter.

Loo responded by saying that she had the impression that the PSI Shafee was referring to was legitimate at the material time.

Shafee: I'm putting it to you that it cannot be there. The company didn't exist.

Loo: There must be something — PetroSaudi International Ltd is a Saudi company.

Shafee: [The fact that] it was incorporated in Saudi is a complete lie.

The company was incorporated in the Seychelles, Shafee revealed to the court.

The senior lawyer then asked Loo if it was Najib’s job as the then prime minister to check if PSI existed in Saudi Arabia, to which she responded with “No”.

Shafee: Was it the PM's job to determine that PSI was a Saudi [entity]?

Loo: I wouldn't know.

Shafee: Was it his job?

Loo: No.

Prior to the murabaha financing, 1MDB had borrowed US$1 billion purportedly to invest in 1MDB PetroSaudi. The money was to be paid into the account of the JV company. PSI was to take up 60% of the shares in the alleged JV by injecting certain assets of dubious value. The US$1 billion was to represent 1MDB's contribution for its 40% shareholding.

However, instead of being paid into the JV company's account, US$700 million of the US$1 billion was diverted into the account of a company called Good Star Ltd, which in truth had nothing whatsoever to do with the JV. The company was incorporated in the Seychelles on May 18, 2009, five months before the JV agreement was entered into. The company was owned and controlled by Jho Low. The balance of US$300 million went into the JV, 1MDB PetroSaudi Cayman.

In order to hide the failure of the JV and misrepresent the value of 1MDB’s investment overseas, a murabaha financing agreement (MFA) was made between 1MDB PetroSaudi and 1MDB in June 2010, but backdated to March 22, 2010 to avoid audit concerns.

Under the MFA, 1MDB was required to pump another US$1.5 billion into the 1MDB-PetroSaudi JV to finance the obligations of the MFA and 1MDB, caused by the fraudulent transfer of US$500 million from 1MDB to the JV's account.

In this trial, Najib is charged with four counts of abuse of power for using his position as the then prime minister and finance minister as well as chairman of 1MDB’s board of advisers to receive gratifications worth RM2.28 billion, and 21 counts of money laundering amounting to over RM4.3 billion.