KUALA LUMPUR — Datuk Shahrol Azral Ibrahim Halmi agreed that Malaysia's former prime minister Datuk Seri Najib Razak was virtually the "emperor" of 1Malaysia Development Berhad (1MBD) as he was the ultimate decision-maker in the company.

Testifying against Mr Najib in the latter’s 1MDB corruption trial, Mr Shahrol referred to a provision in 1MDB's company constitution or memorandum and articles of association (M&A) which he had cited as effectively conferring Mr Najib the "ultimate power" in the company.

Mr Shahrol was referring to Article 117, which required 1MDB to obtain the Malaysian prime minister's prior written approval for major decisions, including those touching on the company's senior management, financial affairs and investments.

Mr Najib's lawyer Tan Sri Muhammad Shafee Abdullah was grilling Mr Shahrol on the latter's interpretation of the Article 117 as meaning that Mr Najib had the ultimate decision-making power within the sovereign wealth firm.

Mr Shafee had suggested to Mr Shahrol that despite Article 117, 1MDB board of directors would still be the ones holding the power to make decisions before seeking Najib's advice on such matters, including financial affairs.

Mr Shahrol disagreed, reiterating that Najib was still the final decision maker in 1MDB.

This response irked Mr Shafee, who then sarcastically suggested to Mr Shahrol that Najib was the “emperor of 1MDB’’ and had no check and balance mechanisms imposed on his power.

Mr Shahrol then agreed, stating further that is what he had experienced during his tenure as 1MBD chief executive officer from 2009 to 2013, where Mr Najib had signed off on documents on 1MDB's investments during that period.

To this, Mr Shafee said: "I'm putting it to you, your interpretation is still totally wrong, you have just made the prime minister the emperor of 1MDB, like the good old days of India. There was no checks and balances".

Mr Shahrol then replied that "for phase 1, 2 and 3, I would have to say yes".

Citing 1MDB lawyers' explanation to him, Mr Shahrol also later said Article 117 effectively gives the prime minister a "free rein" on how to use 1MDB as a strategic instrument of the country.

A ROSE BY ANY OTHER NAME

Mr Shafee had pressed Mr Shahrol regarding the minutes of a two-person meeting in 2009 between Mr Shahrol as 1MDB CEO and Mr Najib as chairman of 1MDB board of advisers.

While Mr Shafee argued that Mr Najib could not have been functioning in such a role when the meeting was not attended by any others from the board of advisers, Mr Shahrol disagreed and noted that 1MDB officials routinely refer to Mr Najib in internal documents by that title of "chairman of the board of advisers".

Mr Shahrol said he had taken Najib's signing off on the meeting minutes as the latter's instructions on "what he wishes for the company and he wants me to execute", but noted that as 1MDB's CEO, he would have compiled with any decisions made by Mr Najib regardless of what role the latter was playing.

"I'm just explaining that at that time, because Datuk Seri Najib wears three hats, I didn't make a distinction about what role is he playing at that time.

"For me, if Datuk Seri Najib makes a decision, it's the same decision that will apply, whether he is prime minister, the finance minister or chairman of the board of advisers, he's the boss, I follow his actions," Mr Shahrol said, also explaining such two-person meetings were to enable "black and white" documentation of Najib's instructions for 1MDB affairs.

Mr Shahrol confirmed that Mr Najib's instructions would have been accepted as valid by 1MDB, exclaiming while stressing Mr Najib's position as the top leader of the country: "Yes, wearing any of the three hats, we will take the instructions seriously and work towards it. He was the prime minister. He is the prime minister!" 

Mr Shahrol disagreed with the suggestion that the board of advisers' advice is not binding on 1MDB's board of directors, saying that he had felt 1MDB directors were "duty-bound" to execute Mr Najib's wishes as the prime minister then.

While Mr Shafee insisted that the power to make decisions lie with the 1MDB board and that the board is to make the decision first while the prime minister can overrule such decisions, Mr Shahrol said: "But in practice, that doesn't always happen in 1MDB."

Mr Najib's trial resumes on Monday before Malaysia's High Court judge Collin Lawrence Sequerah. MALAY MAIL