KUALA LUMPUR (Aug 16): Former Bank Negara Malaysia (BNM) governor Tan Sri Dr Zeti Akhtar Aziz told the High Court that only when BNM had conducted its investigations in 2015 that it knew that US$700 million (RM2.28 billion) of US$1 billion of government-backed 1Malaysia Development Bhd (1MDB) funds had been transferred to an offshore account linked to fugitive financier Low Taek Jho, or Jho Low, because the 1MDB management was not forthcoming with information regarding the funds.
Former prime minister Datuk Seri Najib Razak’s lawyer Tan Sri Muhammad Shafee Abdullah, who was cross-examining Zeti in the 1MDB-Tanore trial, had asked her about BNM’s knowledge of the US$1 billion remittance which 1MDB claimed was meant for the acquisition of 40% of shares in the 1MDB-PetroSaudi joint venture (JV).
The sum was split into two tranches: US$700 million (which ended up with Good Star Ltd, an outfit linked to fugitive financier Jho Low) and US$300 million (which ended up with an outfit for the intended JV) in 2009.
Zeti, the prosecution's 46th witness, affirmed Shafee's statement that it took seven years (from the remittance in 2009 till the investigations in 2015) for authorities to learn that the US$700 million (part of the remittance) ended up with an outfit linked to Jho Low.
Shafee observed that this was quite a long time. Zeti said this was not unusual because she was told by financial authorities all over the world that it takes many years to uncover and detect such wrongdoings.
“When we (BNM) went in to investigate in 2015, it was then that we uncovered that the money went to Good Star,” she said, adding that this was after the central bank received intelligence from foreign regulators.
Zeti previously testified that BNM had conducted on-site examinations on Ambank and Deutsche Bank Malaysia Bhd on March 20, 2015, to verify allegations regarding the transfer of the US$700 million 1MDB funds to Good Star's account.
1MDB management lied to BNM
Zeti then claimed that then 1MDB chief executive officer Datuk Shahrol Azral Ibrahim Halmi had written to BNM to tell the central bank that Good Star was linked to the JV and that the purpose of the transfer was the same — that it was meant for the JV with PetroSaudi International Ltd — the only change was that the funds were to be remitted to different accounts.
She affirmed that BNM approval was needed to green light the remittance as it concerned funds raised for an investment.
She then explained that prior to a tip-off from foreign authorities on where the money actually ended up, BNM had since 2010 conducted its own follow-up on the remittance of the US$700 million, more specifically to find out the status of the investments.
“This is standard procedure, but no information was forthcoming from 1MDB’s management on the transactions,” she said.
Shafee: Did you find something untoward?
Zeti: It was not found out until much later. The first meeting on the remittance was in 2010... and 1MDB was not able to provide any satisfactory answers.
She said that as a result of this, BNM had in 2014 blocked another such transaction from 1MDB.
"That's why in 2014 when they applied again [to make a remittance] in June, BNM rejected that application.
"It is not that BNM did not do anything, we were not able to get any information from 1MDB," she said.
Zeti was BNM governor from 2000 to 2016, and she will continue to be cross-examined by Shafee when the trial continues on Wednesday (Aug 16) afternoon.
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