Why did Shahrol Halmi allow US$700 million to be misappropriated to Good Star Ltd, and why shouldn't he be charged with criminal breach of trust?

The Sarawak Report exposed the minutes of the 1Malaysia Development Bhd (1MDB) Board meeting on 3rd October 2009 which recorded that the Directors (BOD) were furious with the top management team led by Datuk Shahrol Halmi.

According to the minutes, 1MDB went ahead with the signing of the joint venture with Petrosaudi (PSI) without specific knowledge and approvals from the Board.  More specifically, the top executives of 1MDB transferred US$700 million of the proposed invest to an account unrelated to the joint venture company (JVco).

The minutes clearly stated that “the BOD was not consulted on the change of plans to remit US$700 million to PSI.  The BOD’s understanding was for the full US$1 billion to be wired to the joint bank account under the name of the JVCo…”

The minutes of the meeting proved beyond reasonable doubt that the US$700 million of the proposed US$1 billion have been misappropriated by Datuk Shahrol Halmi.  It beggars belief that despite the clear case for criminal breach of trust, Datuk Shahrol remains today a Director of 1MDB.  Perhaps Datuk Shahrol’s performance is so impressive that Dato’ Seri Najib Razak has also made him a Director in Performance Management Delivery Unit (PEMANDU) of the Prime Minister’s Department.

In contrast, the Board of Directors were so livid that they demanded for the US$700 million to be returned “so that the funds could be remitted through the originally agreed channel”.

The Directors also openly reprimanded the top management for their intransigence.  They specifically instructed Datuk Shahrol Halmi and his top management “not to deviate from the BOD’s instructions”.  They further “advised En Shahrol to seek clarification from the BOD if the CEO and management have doubts on any particular matter”.

Of course, based on information already available on the public domain, we know that the US$700 million was never returned to 1MDB.  Instead of Datuk Shahrol being removed from office for his outrageous actions, it was the Chairman Tan Sri Mohd Bakke Salleh who quit as the Chairman of 1MDB 2 weeks later, presumably in absolute disgust.

With the 1MDB Board minutes as the incontrovertible evidence, Datuk Shahrol Halmi must explain to all Malaysians why he signed the 1MDB Petrosaudi joint venture agreement in such haste.  He had agreed to invest US$1 billion in the joint venture within 5 days of meeting the Petrosaudi executives for the very first time in London.

He must also explain why he misappropriated US$700 million to Good Star Limited, a company unrelated to the joint venture, and why he subsequently disobeyed specific instructions by the Board to have the money returned to 1MDB.

He owes the explanation to Malaysians because 1MDB is a wholly-owned Ministry of Finance subsidiary. Today, 1MDB is in a desperate need of a multi-billion ringgit bailout with tax-payers funds. It is also today a major cause of the collapse of confidence in Malaysia’s economy and its currency causing untold hardship to the man-on-the-street because of the scandal Datuk Shahrol ignited.

The question is, did he defy the Board of Directors because of his own wilfulness, or did he dare to do so, because he had even more powerful personalities giving him instructions to carry out the misdeeds?

If he fails to explain himself, Datuk Shahrol Halmi must be charged with criminal breach of trust, fraud and even abetting embezzlement.  He will then undoubtedly go down in the record books as the villain behind the single largest financial scandal in the history of Malaysia to be remembered for generations.