KUALA LUMPUR (THE STAR/ASIA NEWS NETWORK) - Most of the funds raised by 1Malaysia Development Berhad (1MDB), which were intended for the development of Kuala Lumpur International Financial District (KLFID) known as Tun Razak Exchange (TRX) and Bandar Malaysia, were pumped into PetroSaudi International Ltd (PSI) instead.

The High Court was told that the plan was for 1MDB to raise RM5 billion (S$1.64 billion) and RM10 billion through bridging loan facilities for the TRX and Bandar Malaysia projects.

Bandar Malaysia is a mega project located at the former Sungai Besi airport site.

Former 1MDB CEO Datuk Shahrol Azral Ibrahim Halmi, 49, said that 1MDB only raised RM1 billion for the KLIFD project while the RM10 billion was never raised.

The witness, who was under cross-examination by lead counsel Tan Sri Muhammad Shafee Abdullah at former prime minister's Najib Razak's 1MDB trial here on Monday (Nov 4), said only a minuscule proportion from the loan was used for the project and the majority of it was channelled to PSI for additional charges from the Murabaha deal.

Shafee: Were the RM5 billion and RM10 billion in funds raised by 1MDB?

Shahrol: For the RM5 billion, yes. The RM10 billion, no.

Shafee: To finance what?

Shahrol: To finance these two projects, Sungai Besi and TRX.

Shafee: Was the RM5 billion ever used for the project?

Shahrol: Only a very tiny proportion was used for TRX if I recall correctly, although I would have to look at financial records. The money mostly went to PSI for additional tranches for the Murabaha agreement we spoke earlier.

When asked if Najib had ever said he knew for a fact who specifically was the owner of PSI, the witness said "Najib never said that".

Shafee: As the prime minister at that time in his capacity as a shareholder, you cannot expect him to do due diligence?

Shahrol: In general yes. But in this situation, in my perception Najib was the one who had personally invested in this relationship, has met up with Prince Turki (of Saudi Arabia) on a holiday. I cannot say one way or the other if the prime minister would have the capacity to do due diligence.

The witness agreed when Shafee suggested that someone professional should have been tasked to do due diligence such as 1MDB itself.

Earlier during the proceedings, Najib escaped sanction by the court after the prosecution raised an issue on his presence at Tanjung Piai by-election campaign over the weekend.

Lead prosecutor Datuk Gopal Sri Ram said the prosecution had received instructions from Attorney General Tan Sri Tommy Thomas in seeking a sanction by the court to be imposed on the Pekan MP through travel restrictions and self report to the police station.

The prosecution wanted the court to restrict Najib's whereabouts within the Federal Territory and to report to the police station closest to his house every Saturday from 9am.

Sri Ram said it was "miraculous" that Najib's eye problem disappeared and that he was able to go to Tanjung Piai after the court gave him a day-off from the proceedings due to the eye illness last Thursday.

Sri Ram said the AGC received complaints and a police report was lodged by an individual over the matter.

"We submit the accused is using his MC as abuse to obtain adjournment and prolong the trial.

"There must be a sanction on this utter contempt of court proceedings, " Sri Ram said.

Shafee however said AG Thomas did not do proper research and merely issued the directive to the prosecution team while he was abroad.

He said the medical certificate was only for a day and that Najib was able to go to Johor as the irritation in his eyes had disappeared but the swelling remained.

Justice Collin Lawrence Sequerah then said the court would not tolerate any attempt to mislead it and would not hesitate to punish such contempt.

"But after hearing submissions from both parties, the court does not see a need to impose extra conditions on this issue, " he said.

Najib, 66, faces 25 charges in total - four for abuse of power that allegedly brought him financial benefit to the tune of RM2.3 billion; and 21 for money laundering involving the same amount of money.

The hearing continues on Tuesday.