1MDB could not engage in loan agreements without Najib's approval: Witness

NAJIB TRIAL | The High Court was today told that 1Malaysia Development Berhad (1MDB) could no longer engage in any more loan agreements after May 2009 without Najib Abdul Razak’s approval.

Former 1MDB chief executive officer Shahrol Azral Ibrahim Halmi, 49, (above) said this on the 15th day of the trial of the former prime minister’s case involving 1MDB.

Sahrol Azral said after the Terengganu Investment Authority Berhad (TIA), that was later morphed into 1MDB, received the federal government guarantee in May 2009, 1MDB was subject to the Loan Guarantee (Bodies Corporate) Act 1965, under which 1MDB could not engage in any new loan agreements except with the approval of the finance minister.

“In the issuance of the US$1.75 billion bond in 2012, I confirm that 1MDB received a written approval from finance minister. Jasmine Loo (1MDB's lawyer) was involved in the process of obtaining Najib’s signature at the time.

“I was not involved in any dealings with the Ministry of Finance to obtain the approval. I am not sure whether the issuance of the bond was carried following the due process or otherwise, until it was approved by Najib in his capacity as finance minister,” said Sharol Azral, the ninth prosecution witness.

He said Najib had approved the proposed RM6.17 billion loan on the acquisition of Tanjong Energy Holding Sdn Bhd (TEHSB) by 1MDB's subsidiary, 1MDB Energy Sdn Bhd.

Shahrol Azral (below) confirmed this when referring to a letter from the former prime minister to him dated March 26, 2012, regarding the approval of the loan, during examination-in-chief by senior deputy public prosecutor Gopal Sri Ram.

“This is a letter of approval from Najib in his capacity as finance minister to approve the RM6.17 billion bridging loan and US$1.75 billion 10-year notes in connection with the acquisition of TEHSB.

"This approval is in accordance with the Loan Guarantee (Bodies Corporate) Act 1965. This is because all further indebtedness in any form must be approved by the finance minister first.

“Loan approval must be obtained after receiving the internal approval from the 1MDB board of directors (BOD) and shareholder, which is the Minister of Finance Incorporated (MOF Inc) (Najib),” he said this when reading his witness statement.

Shahrol Azral said that he also signed a loan facility agreement obtained by 1MDB Energy Sdn Bhd from Maybank Investment Bank Berhad and RHB Investment Bank Berhad worth RM6.17 billion, dated May 17, 2012.

“This agreement was made between 1MDB Energy Sdn Bhd and Maybank Investment Bank Berhad, as well as the RHB Investment Bank Berhad as ‘Joint Mandated Lead Arrangers’ and the ‘Financial Institutions Set Out in the First Schedule’ as lenders, and with Maybank Investment Bank Berhad as the lending agent for the loan facility.

“The purpose of the RM6.17 billion loan is for the acquisition of TEHSB's 100 percent equity by 1MDB through its subsidiary, 1MDB Energy Sdn Bhd,” the prosecution's key witness said.

Najib, 66, faces four counts of using his position to obtain RM2.3 billion in 1MDB funds, and 21 counts of money laundering involving the same amount of money.

The Pekan MP was charged with four counts of corruption at the AmIslamic Bank Berhad branch, Jalan Chulan, Bukit Ceylon, between Feb 24, 2011, and Dec 19, 2014, while all the money laundering offences were alleged to have been committed between March 22, 2013, and Aug 30, 2013, at the same place.

The hearing is before Justice Collin Lawrence Sequerah.

- Bernama