Hearing on bid to bar Tarek Obaid from accessing alleged 1MDB funds adjourned to Nov 23

Hearing on bid to bar Tarek Obaid from accessing alleged 1MDB funds adjourned to Nov 23
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KUALA LUMPUR (Sept 22): The hearing of the government's application to bar PetroSaudi International Ltd (PSI) chief executive officer Tarek Obaid and others from accessing US$340 million allegedly linked to 1Malaysia Development Bhd (1MDB) has been adjourned to Nov 23.

This is to allow the prosecution to get further instructions on whether to amend the application for prohibitory order, the High Court heard on Thursday (Sept 22).

The amendment would specify the particular subsection of Section 53 of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act (AMLATFPUAA) that the prosecution is relying on for the order.

The application now merely mentions that it is being made under Section 53(1), to be read together with Section 34 of the Criminal Procedure Code.

Section 53(1) states that the public prosecutor may make a prohibition application barring parties from dealing with property held outside Malaysia if he is satisfied that any of the property is (a) the subject matter or evidence relating to the commission of an offence under Subsection 4(1) or a terrorism financing offence, (b) terrorist property, (c) the proceeds of an unlawful activity, or (d) the instrumentalities of an offence.

Judge Datuk Ahmad Shahrir Mohd Salleh, who is hearing submissions on the application, had since Tuesday pointed out that the order was vague and continuously asked the prosecution to specify the subsection under Section 53(1).

Deputy public prosecutor (DPP) Norinna Bahadun initially argued that it was not "fatal" not to have narrowed down the specific subsection.

"The application [says] it is in relation to [proceeds of an unlawful activity]. It is not fatal not to have [it] itemised on whether it is a, b, c, d. It is merely to restrain (the parties from accessing the funds)," she said.  

She later said she would need to seek further instructions of the amendments, with no objections from the respondents.

Besides Tarek, the other respondents in the application are PSI, PetroSaudi Oil Services (Venezuela) Ltd, UK-based law firm Clyde & Co LLP and Temple Fiduciary Services Ltd.

PetroSaudi Oil Services (Venezuela) is a subsidiary of PetroSaudi Oil Services Ltd (PSOSL). PSOSL in turn is unit of PSI, co-founded by Tarek.

Tarek is represented by former solicitor general II Datuk Mohd Yusof Zainal Abiden while Alex Tan is acting for PSI, PetroSaudi Oil Services (Venezuela) and Temple Fiduciary Services. Clyde & Co is not represented.

'IO has personal knowledge, investigation not based on hearsay evidence'

Norinna was in the midst of replying to the respondents' submissions on the order.

She refuted Yusof's submission on Wednesday that some of the documents referred to in Malaysian Anti-Corruption Commission investigating officer (IO) Mohd Afiq Abdul Aziz's affidavit of support were not admissible and argued that without these documents the IO's averments were merely "bare allegations".

The DPP countered that the US Department of Justice (DOJ) reports — concerning alleged fraud and money laundering in 1MDB — and former 1MDB CEO Datuk Shahrol Azral Ibrahim Halmi's witness statement in the ongoing 1MDB-Tanore trial were merely the starting point of the IO's investigation and that his affidavit still stands and should be admissible.

"It isn't the case where he based his entire [investigation] on another investigation. It was the basis for him to conduct further investigation. The allegation (made by respondents) that he had no personal knowledge is a mischaracterisation," she argued.

Prohibition order to block access to US$340 million

In the application filed in July 2020, the government is seeking a total of US$340 million (as of February 2019) held in the client's account of Clyde & Co on behalf of PetroSaudi Oil Services (Venezuela).

It is also seeking unspecified sums that were deposited under an intermediate account name of Temple Fiduciary at Barclays Bank in the UK.

The prosecution has contended that the funds in the escrow account could be traced back to 1MDB.

However, the respondents have argued that the funds in account were "clean monies" — a result of an arbitration award where Venezuela's state-owned entity Petroleos de Venezuela SA (PDVSA) was ordered to pay PetroSaudi Oil Services (Venezuela) for services rendered in relation to an oil exploration contract.

Tan had submitted that both parties had been engaged in an arbitration proceeding in relation to sums under a drilling contract and PDVSA was ordered to deposit US$500 million in an escrow account with Clyde & Co pending the final award. Tan also noted that the final award was made only days after the prosecution's application was filed but did not disclose the final payment.

The application comes after Malaysia levelled charges in February 2020 against Tarek, PSI director Patrick Mahony, and fugitive businessman Low Taek Jho (Jho Low) for engaging in a criminal conspiracy involving Najib and 1MDB.

According to the charge sheet, the criminal conspiracy involved the commission of an offence by Najib using his position as the then prime minister, finance minister and 1MDB advisory board chairman to seek gratification for himself involving a monetary sum of RM60.63 million.

In September 2020, the DOJ filed a forfeiture application to seek US$300 million in additional assets allegedly associated with the multibillion-dollar 1MDB scandal, which it had traced to the escrow account in the UK.

The DOJ claimed that the funds in the account are traceable to a line of credit extended by PDVSA to PSOSL in relation to the use of the two drill ships that PSI acquired with fraudulent funds obtained from 1MDB.

It was reported that PSI is contesting the DOJ's forfeiture claim.

Read also:
Money in escrow account 'clean monies', not linked to 1MDB, court heard
US$185m pumped into PSOSL came from 1MDB, says prosecution
Prosecution: Tarek Obaid alone caused US$180m to be transferred from 1MDB into escrow account
Malaysia’s forfeiture suit against Tarek and PSI is the country’s first internationally
Jho Low, Tarek Obaid, Patrick Mahony charged with criminal conspiracy, embezzlement of 1MDB funds

S Kanagaraju