KUALA LUMPUR (Dec 3): Former prime minister Datuk Seri Najib Razak on Tuesday disputed several testimonies by former Terengganu Investment Authority (TIA) directors Tan Sri Ismee Ismail and Datuk Shahrol Azral Ibrahim Halmi with regard to Sultan of Terengganu Sultan Mizan Zainal Abidin’s directive to stop the issuance of AmBank’s RM5 billion Islamic medium-term notes (IMTN) in 2009.

Najib, who was testifying in his defence for the second day, explained that the federal government’s decision to intervene followed the TIA board of director’s resolution on May 22, 2009 to suspend the IMTN issuance and also suspended the authority granted for its issuance.

“I was notified that Ismee and Shahrol needed to meet me, but they came to my Jalan Duta home. 

"Ismee began by briefing me on what had transpired at the Terengganu Palace earlier that day. He explained that Tuanku Mizan ordered the suspension of the IMTN issuance, and had instructed Ismee and Shahrol to sign the resolution formalising the suspension.

“When I asked if they had a copy of the resolution for my reference, they informed me that they had not been provided with one. Ismee mentioned that all agreements related to the IMTN had already been executed, a fact confirmed by Shahrol, including the agreement for the federal guarantee.”

According to Najib, Shahrol further explained that he had spoken with officers at AmBank, who informed him that the IMTN notes had been fully subscribed, and halting the issuance would result in TIA breaching its contractual obligations.

“I recall being particularly concerned about the federal guarantee, and the potential impact on the bond market, should TIA breach the contract. I asked if they had explained to Tuanku Mizan the consequences of suspending the IMTN, and both of them replied that they had not. They had carried out His Majesty’s order and signed the resolution [to cancel the IMTN],” said the former finance minister.

Najib was responding on his first abuse of power charge under Section 23 of the Malaysian Anti-Corruption Commission Act, where he is alleged to have misused his position on April 1, 2009 to get the Cabinet’s consent — through a Ministry of Finance memorandum to the Cabinet — for the RM5 billion government guarantee to TIA, where the action resulted in his own financial benefit in receiving RM60.6 million in 2011.

This RM60.6 million was allegedly received from the PetroSaudi International deal, with the funds from the RM5 billion bond issuance to TIA, which later became 1MDB. Shahrol and Ismee later became 1MDB directors.

Najib continued to repeat, just as he did during the SRC International Sdn Bhd trial, that any funds deposited into his AmBank account were from a Saudi donation.

While Ismee had during the trial described Najib’s intonation and reaction as giving a picture that he wanted to continue the IMTN bond, the former prime minister clarified he was merely reflecting his genuine concern and potential impact on the Malaysian government’s reputation in the bond market should TIA breach its contract.

“There was no hidden agenda, as Ismee seemed to insinuate, regarding my genuine concern. In fact, Ismee, being someone with a background in finance, should have recognised the validity of my concern, as opposed to insinuating that my concerns were unjustified and aligned with an ulterior motive,” Najib said.

The former prime minister also questioned Shahrol’s testimony, where the former 1MDB chief executive officer told the court that Najib supposedly asked him to go ahead as Najib would speak to Tuanku Mizan.

“I did not say this to Shahrol. I recall that neither Shahrol nor Ismee seemed certain about how to handle the situation, and I, too, was unsure at that moment. Due to this uncertainty, I did not offer any suggestions or advice on how to resolve the matter, as I needed time to process what I had been briefed on,” he added.

Najib further disputed Shahrol’s testimony suggesting that fugitive businessman Low Taek Jho (Jho Low) was present that same evening at Najib’s Jalan Duta home for discussions.

“I recall clearly that Jho Low was not present before or during my meeting with Shahrol and Ismee on May 22, 2009, and this fact was also confirmed by Ismee. Nor did I have, or have I had since, any discussions with Jho Low related to the matters raised in that meeting.

“It is apparent that Shahrol is attempting to place Jho Low at my residence before his arrival, and to imply that I was conferring with Jho Low to give the impression that we were conspiring to ensure the issuance of the IMTN.

“However, Shahrol’s testimony supports that it was not me who was conspiring with Jho Low to ensure the issuance of the IMTN, but rather it was Shahrol himself — as testified by Shahrol himself — [because] after his meeting with Tuanku Mizan, his immediate call was to Jho Low to brief him on what had transpired during the meeting with Tuanku Mizan, and seek advice on how to resolve the matter.”

Najib said that according to Shahrol, Jho Low was shocked.

“Based on the evidence presented in this trial, I believe Shahrol reached out to Jho Low immediately after leaving the palace, because he knew that Jho Low had a vested interest in the issuance of the IMTN, indicating that it was Jho Low’s involvement and interest, not mine that Shahrol sought to align with.

“I also believe this because if Shahrol had truly believed that Jho Low was an adviser to Tuanku Mizan — prompting him to consult Jho Low immediately after leaving the palace — it would have seemed odd to Shahrol that Jho Low was not present during the signing of the resolution by Ismee and Shahrol, nor was Jho Low aware of Tuanku Mizan’s decision to suspend the IMTN.

“The fact that Jho Low was not at that meeting, and was shocked by the suspension, did not even raise an eyebrow for Shahrol. Coupled with the evidence presented, [this] shows that Shahrol never questioned Jho Low about his absence or his surprise, despite Jho Low's supposed role as an adviser to Tuanku Mizan on TIA. [This] supports my belief that Shahrol was conspiring with Jho Low to ensure the IMTN was issued irrespective of Tuanku Mizan's directive," Najib said.

He said at the time when Shahrol proceeded with the issuance of the IMTN, TIA was still TIA, and not yet 1MDB.

“I was not the chairman of the board of advisors of 1MDB (as 1MDB did not exist then). There was no talk of federalisation, there was no Article 117 of the memorandum of articles, so I had no authority to instruct him to proceed.

“Shahrol, for all intents and purposes, at that point in time was answerable and accountable only to the Agong (Tuanku Mizan) and Menteri Besar Terengganu Inc, and as the CEO of TIA, Shahrol owed a fiduciary duty to the company and its interest,” Najib said.

Answering further questions from lead defence counsel Tan Sri Muhammad Shafee Abdullah, the former prime minister said he did not instruct Shahrol to defy Tuanku Mizan’s order.

“No, I have not (directed Shahrol), and would not order him to defy the order of the king (Tuanku Mizan),” Najib replied.

The prosecution had adduced evidence that Jho Low had bought the IMTN bonds in advance — and flipped it and received monetary benefits. Out of the RM5 billion from the IMTN raised, 1MDB only obtained RM4.3 billion, and these funds were used to invest in the PetroSaudi International joint venture.

Somehow, the funds were instead directed to Good Star Ltd controlled by Jho Low, and from there, US$20 million (RM60.6 million) made its way from Good Star to Najib’s account.

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