During Datuk Seri Najib Razak’s trial over the alleged misappropriation of RM2.27 billion from 1Malaysia Development Bhd (1MDB), his defense lawyer, Tan Sri Muhammad Shafee Abdullah, argued that the national energy company Petroliam Nasional Bhd (Petronas) grants more extensive powers to a sitting prime minister compared to 1MDB. This assertion was made during the cross-examination of Malaysian Anti-Corruption Commission (MACC) Senior Superintendent Nur Aida Arifin, who was the 49th prosecution witness.
Muhammad Shafee emphasized the differences between the Memorandum and Articles of Association (M&A) of Petronas and 1MDB. He pointed out that Article 109 of Petronas' M&A stipulates that the chairman of the board must be appointed by the prime minister, who also holds a proxy over all government-held shares, which must be exercised under the prime minister’s direction. This essentially gives the prime minister overarching control over Petronas’ affairs.
In contrast, the powers vested in the prime minister regarding 1MDB, outlined in Article 117 of its M&A, are more constrained. Specifically, Article 117 requires the prime minister’s prior written approval for amendments to the company’s constitution, as well as for the appointment and removal of directors and senior management. Additionally, the prime minister’s approval is needed for any significant financial commitments, restructuring, or actions likely to affect the government's guarantee for the company, national interest, national security, or any federal policy. The determination of what constitutes national interest or security lies with the Malaysian government and is deemed final and conclusive.
Nur Aida acknowledged the differences highlighted by Muhammad Shafee, agreeing that the prime minister had the power to veto decisions in Petronas, thereby underscoring the extensive authority the prime minister holds over Petronas in comparison to 1MDB.
This line of questioning aimed to demonstrate that the governance structure of Petronas provided the prime minister with more absolute control, potentially to bolster Najib’s defense in the 1MDB trial by contrasting the levels of oversight and control in different government-linked entities.
Najib’s trial, overseen by trial judge Datuk Collin Lawrence Sequerah, is set to continue tomorrow. The case has garnered significant attention due to its implications for governance and accountability in Malaysia's handling of state-linked corporations. The outcome may set a precedent for how future cases of corporate governance and executive power are interpreted in the country.
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