KUALA LUMPUR, May 11 — A former 1Malaysia Development Berhad (1MDB) company secretary today told the High Court that she did highlight once the company constitution’s requirement for the prime minister — then Datuk Seri Najib Razak — to give his written approval for financial matters such as a loan that 1MDB was taking.
But the former company secretary, Goh Gaik Kim, said the prime minister’s approval clause was dismissed as unnecessary by her then superior who was 1MDB’s general counsel or in-house lawyer, Jasmine Loo, for that loan.
Goh said this while testifying as the 17th prosecution witness in Najib’s trial over the misappropriation of more than RM2 billion of 1MDB funds.
Today, Najib’s lawyer Wan Aizuddin Wan Mohammed quizzed Goh over matters relating to 1MDB’s Memorandum and Articles of Association (M&A) — which is the company’s constitution, and whether she had seen the prime minister’s written approval for matters such as appointment of 1MDB directors and for any financial commitments that 1MDB would take up.
Goh had listed the differences in 1MDB’s company constitution with the M&A of other companies as including 1MDB’s M&A having a provision for a board of advisers, having preference shares apart from ordinary shares, and requiring the prime minister’s approval for certain transactions.
Goh agreed with Wan Aizuddin’s suggestion that she would have to play her role as company secretary to advise the company, in order for 1MDB to observe all these provisions in the company constitution.
Wan Aizuddin then zoomed in on Article 117 of 1MDB’s company constitution, a clause which listed when the prime minister’s prior written approval was required.
Article 117(c) specifically requires the prime minister’s written approval for any financial commitments by 1MDB including investments, restructuring or other matters relating to guarantees issued by the federal government, national interests, national security or federal government policies, with Malaysia’s federal government to make the “final and conclusive” decision on what amounts to national interests, national security and national policies.
While Goh said she had not seen such a written approval by the prime minister for 1MDB’s financial commitments, she confirmed that she did highlight this requirement in the past regarding a financial matter.
Wan Aizuddin: In relation to Article 117(c) for financial commitment, restructuring and other matters, have you ever sighted any written approval by the prime minister?
Goh: No, I have not.
Wan Aizuddin: And as company secretary, you have never advised the board of directors or management when they come out with all these investment proposals, you said “wait, under our M&A, there is this provision under Article 117(c) that requires written approval of the prime minister”?
Goh: I did, I do remember discussing it once with Jasmine Loo, because I reported to Jasmine Loo and Jasmine Loo was general counsel, she said this is not required because this was not regarding investment, this was I think regarding a small loan or something, because it also says “financial commitments”. She says you have to see whether it affects the guarantee, so she said it is not required.
After Goh confirmed that this was the only occasion where she had raised the Article 117(c) requirement of having the prime minister’s written approval for 1MDB financial commitments, Wan Aizuddin then again asked what Loo had said.
Wan Aizuddin: She said no necessity and she said no necessity not because Article 117(c) should not be adhered to, but because it is on subject matter which has got nothing to do with Article 117(c)?
Goh: I can’t remember what she said, but I think it was something about it doesn’t affect the guarantee given.
Goh was company secretary of 1MDB from March 2011 until April 1, 2016, and had initially reported to 1MDB’s then chief financial officer Radhi Mohamad for several months before then reporting to 1MDB’s then general counsel Jasmine Loo. After Loo quit in around 2014, Goh said she then reported to Ivan Chen Kai Hong who replaced Loo as 1MDB’s general counsel.
Goh confirmed she was an employee of and in-house company secretary for 1MDB, describing her own rank as vice-president in the company to be of managerial level but not amounting to senior management of 1MDB.
Goh said 1MDB’s senior management would be the chief executive officer (CEO), the chief financial officer (CFO), the chief investment officer (CIO) and executive directors, but said it would be hard to say whether the general counsel was part of 1MDB’s senior management as it did not carry a “C” title but noted that Loo had an office in the C-suite.
“It’s a very exclusive office and all the C-levels sit in that suite, the CFO, the CEO and CIO and general counsel as well,” she said.
Goh confirmed having taken instructions from the senior management of 1MDB such as for the preparation of resolutions — to be signed by the directors and the shareholder for decisions on 1MDB matters.
Yellow papers with PMO’s letterhead
Asked if she had recalled advising 1MDB’s board of directors during their board meetings or before signing off on any directors’ circular resolutions that the prime minister’s prior written approval is required for certain transactions, Goh said these were handled by the 1MDB management.
She said that she had seen approvals by the prime minister for the appointment of 1MDB directors, on yellow papers with the prime minister’s office letterhead.
“So, Shahrol would pass me that approval from the PM’s office, it comes, I think, on yellow paper,” she said, referring to former 1MDB CEO Datuk Shahrol Azral Ibrahim Halmi.
While Goh said that these approvals by the prime minister came under Article 117, Wan Aizuddin suggested that these approvals were actually for a different clause in 1MDB’s company constitution, namely Article 68 which stated that any appointment or removal of the company’s directors shall not be formalised without the prior written approval of the prime minister.
In response to Wan Aizuddin’s suggestion that these yellow papers was the prime minister — then Datuk Seri Najib Razak — exercising of his powers under Article 68 instead of Article 117, Goh said: “Article 68 and Article 117, the approval of the prime minister would be required, so it fulfills both Article 68 and Article 117.”
Goh also clarified that she was referring to Article 117(b), where the prime minister’s prior written approval was also required for the appointment and removal of the company’s directors and senior management team.
While another part of Article 117 requires the prime minister’s written approval for any amendments to 1MDB’s M&A, Goh confirmed that the company constitution remained unchanged during her years of service from 2011 to 2016, except for one amendment when Arul Kanda Kandasamy was heading 1MDB.
In response to Wan Aizuddin’s suggestion that the “ultimate decision maker” in a company is the board of directors, Goh said: “Under the Companies Act, there are certain transactions that will need shareholder’s approval, these are substantial transactions which exceed a threshold stated in the Companies Act.”
Asked to explain the process in listed firm Sime Darby Berhad — where she had previously served as company secretary for 16 years and where government entities such as Permodalan Nasional Berhad were the majority shareholders — when shareholder approval were required, Goh said: “If we required approval from shareholders, we would have a board meeting to approve the transactions subject to shareholders’ approval, then we would issue a circular to shareholders to call an EGM, then we would have the EGM and we would put the resolution to a vote.”
When Wan Aizuddin said “so basically you are saying the board of directors decides first, then it will be elevated to shareholders for subsequent approval”, Goh said “yes, that’s right”.
When Wan Aizuddin asked if there were any examples where Sime Darby Berhad did not hold an extraordinary general meeting (EGM) but instead obtained approval from the shareholders through shareholder’s resolutions, Goh said this would not be possible as Sime Darby Berhad had more than 10,000 shareholders and that “it would be impossible for us to obtain the signature of 10,000 shareholders.”
In 1MDB’s situation, its sole shareholder was the Finance Ministry’s MOF Inc, while the shareholder holding preferred shares was also the MOF Inc. Najib who was the finance minister had signed approvals on behalf of the shareholder MOF Inc on shareholder resolutions to approve 1MDB’s investments and financial transactions and financial deals.
Previously, Najib’s lawyers too had raised the point of whether there were any written approval by Najib in his capacity as prime minister for 1MDB’s financial matters in line with Article 117 and sought to differentiate it from Najib’s signed approval of 1MDB’s financial matters as the finance minister, but other prosecution witnesses such as former 1MDB director Tan Sri Ismee Ismail had in the past replied by saying they viewed Najib to be the same person wearing different hats as the prime minister, finance minister and chairman of 1MDB’s board of advisers.
When asked if she had ever raised to Loo or 1MDB’s board that there would be no need for special shares to be issued since the company was 100 per cent owned by the same entity of MOF Inc, Goh said she did not see anything wrong with having MOF Inc as being both the ordinary shareholder and special shareholder, but noted that it may be a bit funny.
“It’s a bit funny because normally the preference shareholder would be different from your 100 per cent ordinary shareholder, because otherwise it’s pointless you know,” she said, but agreed that there was no harm in maintaining such an arrangement and that no one had raised this throughout her tenure as 1MDB’s company secretary.
Najib’s trial before High Court judge Datuk Collin Lawrence Sequerah resumes tomorrow morning, with Goh expected to continue testifying.