What pressures did 1MDB directors face regarding PetroSaudi deal?

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1MDB Directors Faced Significant Pressure to Approve PetroSaudi Deal

1MDB directors likely would have resigned if they had opposed Prime Minister Datuk Seri Najib Razak's directives concerning the PetroSaudi International Ltd (PSI) joint venture. During a critical September 26, 2009 meeting, the board was informed that Najib wanted an expedited decision on the deal. Despite reservations and a desire for further studies, the directors ultimately approved the joint venture, a decision influenced by the understanding that dissent would lead to their departure from their positions.
Pressure to Align with Prime Minister's Wishes

Former 1MDB director Tan Sri Ismee Ismail testified that board members were unlikely to disagree with Najib's requests. The board's approval of the joint venture on September 26, 2009, occurred despite reservations and a prior desire for more in-depth analysis. Ismee indicated that opposing the prime minister's wishes would likely necessitate resignation, suggesting a significant constraint on the board's autonomy.
Perception of a Government-to-Government Agreement

At the time, the 1MDB-PSI deal was perceived as a governmental undertaking between Malaysia and Saudi Arabia. This perception, coupled with the prime minister's expressed desire for the deal, contributed to an environment of urgency and expectation. Ismee himself expressed excitement, believing the venture would fulfill Najib's objectives and strengthen bilateral relations.
Conditions Imposed and Subsequently Violated

While the 1MDB board attempted to safeguard the company's interests by imposing specific conditions on the joint venture, these conditions were not met and were subsequently violated. By October 3, 2009, the board discovered that US$1 billion intended for the joint venture had not been transferred as instructed. A significant portion, US$700 million, was instead directed to Good Star Limited, an affiliate of PSI later revealed to be owned by Low Taek Jho. This deviation from approved terms and the apparent hidden transactions caused considerable disappointment and anger among board members, including chairman Tan Sri Mohd Bakke Salleh, who later resigned on October 19, 2009.
Article 117 Provided Override Authority

Article 117 of 1MDB's company constitution conferred substantial power upon the prime minister, Najib, allowing him to override board decisions and to appoint or remove directors. This provision meant that while the board could set conditions, the prime minister ultimately held the authority to nullify their decisions or replace board members if dissatisfied, underscoring the immense pressure directors faced to comply with his directives.

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What pressures did 1MDB directors face regarding PetroSaudi deal?

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