This article first appeared in The Edge Malaysia Weekly on June 3, 2024 - June 9, 2024

AmBank and its former group managing director Ashok Ramamurthy turned a blind eye to dubious 1Malaysia Development Bhd (1MDB) transactions running into billions of dollars, which were being remitted to sham entities, former Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz testified last week, comparing the bank’s actions with Deutsche Bank’s more vigilant measures over suspicious transactions involving the state-owned company.

Under re-examination by deputy public prosecutor Ahmad Akram Gharib, Zeti said that under the stewardship of Ashok, the bank provided Bank Negara with false and misleading information over the real amounts being remitted in and out of the bank into a shell company known as Good Star Ltd, owned by fugitive financier Low Taek Jho (Jho Low).

Zeti, who was the 46th prosecution witness in the 1MDB-Tanore trial of former prime minister Datuk Seri Najib Razak, placed the blame squarely on Ashok for allowing the transactions to be remitted.

Zeti said the “worst fraud” committed by AmBank was reporting through the International Transaction Information System (ITIS) that the money was going to PetroSaudi International Ltd (PSI) and not Good Star. ITIS is used by the central bank to monitor and report transactions, as it details the payee, recipient, amount and purpose of transactions.

“They fabricated that it was going into PetroSaudi. So it’s a serious offence that they gave wrong information,” she said.

Zeti was referring to a loan that 1MDB managed to obtain from AmBank and Standard Chartered in 2010 for RM2.6 billion, although the company was already heavily in debt as it had lost an initial US$1 billion from a sham investment with PSI.

Of the RM2.5 billion loan, Najib, as 1MDB shareholder through the Minister of Finance Inc, had given his approval for 1MDB to make a payment of US$330 million from part of the AmBank loan to PSI. The amount was purportedly a loan to the Saudi company.

PSI then sent a drawdown notice to instruct 1MDB to send the US$330 million to an RBS Coutts account belonging to Good Star.

Zeti said that AmBank, as the remitting bank, had reported to ITIS that four separate tranches amounting to US$330 million — US$125 million, US$65 million, US$30 million and US$110 million — were being sent to PSI when it was actually being transferred to Good Star.

She also alluded to 1MDB money entering Najib’s personal accounts in eight tranches, which the bank did not flag. She said AmBank did not submit an ITIS report in many of the transactions involving Najib, and this could be considered false reporting. She explained that with regard to the money going into Najib’s accounts, AmBank did not report the funds as entering into his account (personally) but into AmBank’s account, and this is why she considered it false reporting.

Touching on the US$619 million that had been deposited into Najib’s accounts, which the prosecution claims belongs to 1MDB, she explained that it was divided into eight tranches of remittances.

“Even so, there is no report as to who was the recipient or what amount. AmBank only reported the last US$100 million entry, but it did not disclose that the beneficiary was Najib, as it only said it went to AmBank’s account itself.”

Zeti said that 80% of the fault of AmBank in the 1MDB debacle was Ashok’s, and that this had resulted in AMMB Holdings Bhd having to pay RM2.83 billion to the Malaysian government as settlement on all outstanding claims and actions in relation to AmBank Group’s involvement in the 1MDB corruption scandal. It also had to pay Bank Negara RM53.7 million for non-compliance by AmBank (M) Bhd and AmBank Islamic Bhd with certain regulations.

Akram: Was it the fault [non-compliance] that caused AmBank to pay the highest-ever penalty in the history of the country? Was it during Ashok’s tenure, was it his fault?

Zeti: Yes, 80% of it was during his time, and the most serious fault is reporting false information and not reporting transactions.

The issue of Ashok’s involvement stemmed from Najib’s lead counsel Tan Sri Muhammad Shafee Abdullah obtaining a statement recorded by the Malaysian Anti-Corruption Commission from Ashok in March 2019, when the latter was residing in Singapore.

However, Ashok declined to testify in the trial and he is not listed as a prosecution witness.

Zeti pointed out that other financial organisations involved in 1MDB transactions had flagged suspicious transactions before remitting any funds.

She made specific reference to the sham investment where 1MDB had agreed in 2009 to inject US$1 billion into 1MDB-PSI — 1MDB’s joint venture (JV) with PSI — for a 40% stake in the partnership. PSI was supposed to inject US$1.5 billion worth of oilfield-related assets into the JV for its 60% stake.

However, the management of 1MDB — which at that time was being controlled by Jho Low despite his not having any official ties to the company — had taken steps to divert US$700 million of that money into Good Star, instead of PSI.

The balance US$300 million was sent to a JPMorgan bank account also controlled by Jho Low.

A previous witness in the trial, Jacqueline Ho Yek Wan — a former officer at Deutsche Bank — had testified that the bank had already done more than it was required to do in the transfer of the US$1 billion as requested by 1MDB in 2009 because Bank Negara greenlit the transfer.

Ho testified that 1MDB was in a hurry to get the US$1 billion remitted, even after the company changed the recipients of the transfer at the eleventh hour. She maintained that before Deutsche Bank made the transaction, it took multiple steps to check on the sudden change in the recipients before making the transfer. The steps included checking with Bank Negara to see if the central bank had approved the change of recipients.

In the initial stages of the remittance, she had asked former 1MDB CEO Datuk Shahrol Azral Ibrahim Halmi to obtain permission from Bank Negara for the US$1 billion transaction as it was required under the Foreign Exchange Administration Regulations for transactions of RM100 million and above.

“In the case of other financial institutions, they saw the money going into Good Star and they did due diligence and in the end, they got Shahrol to say Good Star was a subsidiary of PetroSaudi,” Zeti testified. However, she did not mention that Bank Negara had approved the transfers.

Ashok has a different version. He claims he gave Zeti a letter at a confidential meeting.

In his cross-examination of Zeti, Shafee read out in court excerpts of Ashok’s MACC-­recorded statement where he claimed that he and his predecessor Cheah Tek Kuang had gone to see her on Sept 21, 2012, to inform her of large sums of monies going into Najib’s accounts at the bank. But Zeti claims that this was merely a courtesy call from the two men.

Ashok said in his statement that he was alerted to the increasing amount of money going into Najib’s account and that in the meeting with Zeti, he had given her a letter informing her of this.

Things got heated between Shafee and Zeti as the latter vehemently denied ever receiving such a letter at the meeting. Ashok claimed that Zeti had read the letter and given it back to him and she told him that this matter was confidential.

“I’m suggesting in the meeting with Cheah and Ashok, where the letter was brought along, you may very well be right it was a courtesy call. But it could have been about Datuk Najib’s statement of accounts,” Shafee pushed.

“I never took the letter, the meeting was a courtesy call. If there are any issues with clients’ accounts there are well-known channels to report irregularities which have occurred. It’s not important with the governor to discuss such details. That was not the case,” she maintained in the face of Shafee’s insistence that she had seen the letter.

Shafee: He said you finished reading the letter in 10 minutes.

Zeti: No.

Shafee: Did he give you the letter or you refused to accept it?

Zeti: I refused the letter.

Shafee: Were you given a letter?

Zeti: No I was not.

Shafee, referring to Ashok’s statement, suggested to Zeti that she had told the men not to mention Najib’s name in the meeting for fear of their conversation being tapped. Zeti denied the contention.

“He [Ashok] said the meeting lasted about 45 minutes to one hour. Did you also tell the two gentlemen asking them not to mention the PM by name? Because people have listening devices and can lip read?” Shafee pursued, prompting another vehement denial from Zeti.

Shafee then recalled Cheah to the stand to ask him about the letter.

Cheah said that while he was at the meeting, he did not pay attention to the conversation and as such, could remember the details of the conversation. He added that he was reluctant to go for the meeting.

However, he recalled that Zeti had been handed the letter by Ashok and that she had read it and returned it to him.

Shafee then asked if he was not paying attention at the meeting, was he sure that the letter was given to Zeti.

“That I'm 100% sure,” Cheah replied.

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