FORMER prime minister Najib Razak instructed the Terengganu Investment Authority (TIA) to proceed raising RM5 billion through Islamic medium term notes in 2009, despite being told otherwise by then Yang di-Pertuan Agong Sultan Mizan Zainal Abidin, a witness in the 1MDB trial said today.
Former TIA CEO Shahrol Azral Ibrahim Halmi told the court that the order was given via TIA’s special adviser Low Taek Jho, better known as Jho Low, on May 27, 2009.
“I was informed by Jho Low (on the phone) that we are to follow Najib’s instructions, given to both of us previously on the night of May 22, 2009, that the Islamic medium term notes issuance must continue, even if there is opposition from other shareholders,” the witness told the Kuala Lumpur High Court.
Shahrol and former TIA director Ismee Ismail signed the bonds issuance agreement with AmInvestment on May 27, 2009.
Two days later, TIA received RM4.385 billion in net proceeds.
The witness told the court that the amount was reduced due to underwriting fees and other costs, which he did not have the details.
Najib is on trial for four counts of power abuse to enrich himself with RM2.3 billion from 1MDB and 21 counts of laundering the same amount.
Sultan Mizan opposed the bonds issuance
On May 22, 2009, Shahrol said he received a “surprising message” from the Terengganu palace in Kuala Lumpur.
“I was told by Sultan Mizan to make my way to the palace, along with Ismee, to appear before him immediately. I went straight to Terengganu palace after Friday prayers.”
In a meeting room in the palace, Shahrol and Ismee were shown resolution documents by Sultan Mizan and his sister Tengku Rahimah Almarhum Sultan Mahmud.
The documents were resolutions suspending the power and authorisation of Shahrol, Ismee and other executives from acting on the bonds issuance. The resolutions sought the immediate suspension of the proposed bonds issuance.
“As I recall, His Majesty ordered, ‘Please sign this resolution, you can read it if you want.’ I was speechless and I felt there was something wrong with Tuanku Mizan’s intonation, which seemed like he was upset.
“I looked at Ismee, and I did not say anything except to His Majesty why he was upset and had demanded that I sign the resolution. I was shocked by his order because Low had told me previously that Sultan Mizan did not oppose the bonds issuance.”
Shahrol said it was at this meeting that Sultan Mizan used the phrase “unsavoury character”.
“However, I do not know who Sultan Mizan was referring to,” Shahrol said, adding that he does not know the cause of the clash between TIA stakeholders.
After the duo left, Shahrol said he called Low to inform him of the outcome of the meeting.
Low requested Shahrol to come to Najib’s residence at Langgak Duta the night of May 22, 2009.
Shahrol said he was informed by TIA executive director Casey Tang that the bonds issuance could not be stopped as the agreement had been signed.
AmBank relationship manager Joanna Yu also informed Shahrol that some bonds have been bought up during the book building exercise that had already begun.
“Withdrawing will be considered to be in breach of the agreement,” Shahrol told the court.
Meeting at Najib’s house
Later that night, Shahrol went to Najib’s residence, where Low was also there.
To Najib’s questions, Shahrol said he did not know why Sultan Mizan was upset and that he received no copies of the signed resolutions.
After briefing Najib, the former prime minister said: “You go ahead, I will talk to Tuanku.”
Shahrol said he took it to mean that he was “mandated” by Najib, who was also finance minister, to continue with the bonds issuance.
On May 27, 2009, AmBank issued a letter to Shahrol informing him that the bank had responded to a letter by Tengku Rahimah Almarhum Sultan Mahmud, who is Sultan Mizan’s sister.
She had informed the bank that the bonds issuance was carried out without the prior approval of the Agong and sought its suspension.
Tengku Rahimah resigned from the board on May 27, 2009, Shahrol told the court.
“AmInvestment basically said that the IMTN (Islamic medium term note) could not be suspended as it would disrupt the market and carry a serious implication to the IMTN capital market,” Shahrol said.
Najib faces 20 years imprisonment if convicted. The 66-year-old accused is represented by a dozen lawyers led by Muhammad Shafee Abdullah.
Former Federal Court judge Gopal Sri Ram is leading the prosecution before Kuala Lumpur High Court judge Collin Lawrence Sequerah. THE MALAYSIAN INSIGHT
After trouble with palace, TIA morphed into 1MDB
The Terengganu government had allowed the federal government to take over the Terengganu Investment Authority (TIA) and turn it into 1MDB barely four months after the company was established, the Kuala Lumpur High Court heard today.
According to TIA’s then CEO Shahrol Azral Ibrahim Halmi, the company was incorporated in February 2009, but trouble with the palace led to a transfer of ownership from the Terengganu Menteri Besar Incorporated to the Minister of Finance (Incorporated) in July that year.
Trouble began on May 22, 2009 when the TIA board issued a circular of a directors resolution which stated that the RM5 billion bond issuance by the company was to be suspended.
The directors also ordered that Shahrol and all other directors were barred from handling the bond issuance.
Later that afternoon, Shahrol said he and fellow TIA director Ismee Ismail were summoned by Terengganu ruler Sultan Mizan Zainal Abidin to Istana Terengganu in Kuala Lumpur.
There, an incensed Sultan Mizan (above) had decreed: “Please sign this resolution. You can read it if you want”.
The document was authored by Tengku Rahimah Puteri Sultan Mahmud, the elder sister of the Terengganu ruler, a TIA director and a prominent corporate figure.
This document contained the TIA directors’ resolution which ordered Aminvestment Bank Bhd to suspend the bond issuance until several conditions were met.
“I was shocked because Jho Low had told me that Sultan Mizan had no objections to the bond issuance.
“This was the first time I am hearing from Sultan Mizan that Terengganu had such conditions because previously (I was under the impression) Low – the adviser to and facilitator between Sultan Mizan and Najib Abdul Razak – never informed me of those conditions.
“Ismee and I signed the resolution and were ordered to leave. We were not given a chance to explain that the bond issuance had already been executed,” said Shahrol.
He also told the court that Sultan Mizan had used the term “unsavoury character” during their brief meeting, but he was unsure who the ruler was referring to.
Later that evening, Shahrol was instructed to brief Low and Najib, the prime minister at the time, at the latter’s Kuala Lumpur residence.
“Najib asked if I knew why Sultan Mizan was angry and I said I didn’t know. He asked if I had a copy of the directors’ resolution, which I didn’t.
“Following this, Najib said, to the effect of, ‘You go ahead. I will talk to Tuanku’,” said Shahrol.
By May 27, Ambank wrote to Shahrol in response to a letter by Tengku Rahimah to inform TIA that the bond issuance could not be suspended because it would affect the bond market. On that same day, Tengku Rahimah resigned as a TIA director.
In the month of June, the ownership of TIA was swiftly transferred to the Finance Ministry and by July 19, the company was to be known as “1Malaysia Development Bhd”. MKINI
-THE MALAYSIAN INSIGHT / MKINI
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