KUALA LUMPUR (Dec 3): Former prime minister Datuk Seri Najib Razak maintained that he had not lent any "weight nor influence" in the federalisation of the Terengganu Investment Authority (TIA), which eventually became 1Malaysia Development Bhd (1MDB).
Taking the stand to testify in his defence in the 1MDB-Tanore trial on Tuesday, Najib said that he met with the Sultan of Terengganu, Sultan Mizan Zainal Abidin, who was also the then Yang di-Pertuan Agong, in June 2009, and that federalisation was not even an option.
"During that meeting, despite being aware of His Majesty’s dissatisfaction over the management of TIA, I did not advise His Majesty that the federalisation of TIA would be the only option, or even an option," Najib said.
He added that he had suggested that TIA should adopt the structure of the Employees Provident Fund (EPF).
"Although the EPF is placed under the Ministry of Finance, all investment decisions shall be determined by the entity's professionals, without government intervention, and this suggestion was well received by His Majesty," Najib said, adding that he communicated this to the Cabinet in a later meeting.
This is significant in the trial, as, for the first abuse of power charge, Najib is alleged to have obtained the Cabinet's consent in April 2009 over a government guarantee for TIA to get domestic and foreign market loans of up to RM5 billion by way of Islamic medium-term notes (IMTN).
In his decision to call for Najib’s defence, presiding judge Datuk Collin Lawrece Sequerah said that Najib was instrumental in changing TIA’s name to 1MDB and caused amendments to the company's memorandum and articles of association, which consolidated power to himself.
On the stand on Monday, Najib questioned the validity of the charge on the purported grounds that he was not actively involved in the inception of TIA, and that he was merely following through with an earlier Cabinet decision under his predecessor, Tun Abdullah Ahmad Badawi.
On Tuesday, the ex-PM said that following the meeting with the King and the Cabinet, Ministry of Finance (MOF) officials met with TIA officials and came up with three options for the company.
Najib highlighted that two out of the three options recommended by the MOF under his leadership indicated lacklustre sentiment for the federal government to take over TIA.
The two options cited by the ex-PM was for TIA's structure to be maintained with a few improvements in its governance structure, and for Menteri Besar Terengganu Incorporated (MBTI) to exercise complete control over TIA, notwithstanding the back-to-back guarantee by the federal government.
"It is plain and clear that I did not direct the Cabinet to elect to federalise TIA; instead, I left the decision to be made by TIA and MBTI. I did not put any weight nor influence behind the federalisation exercise.”
Najib also testified that then TIA and 1MDB chief executive officer Datuk Shahrol Azral Ibrahim Halmi was the one who repeatedly proposed for the company's name to be changed to 1MDB, with a "triple-tier system of checks and balances, in which the PM is to chair the entity's board of advisers and approve the appointments of its board of directors".
On the stand on Tuesday, Najib denied ever discussing any of this with fugitive businessman Low Taek Jho (Jho Low), and that Shahrol must have been following Jho Low’s direction independently.
In one of his many missives to Najib's office, Shahrol allegedly said that upon consultation with TIA's banker and legal counsel, TIA had been advised that there was no requirement for MOF Inc to obtain parliamentary consent for the federalisation, unless investments were made from the Federal Consolidated Fund.
Najib said it was inappropriate to rely on this suggestion, and this was an issue to be handled by MOF advisers to safeguard its interests.
The ex-PM also noted that by July 19, 2009, TIA had already agreed to be federalised. But,Shahrol continued to seek advice from Jho Low, who was said to have served as a special adviser to the then Agong on matters in which the Agong no longer held any interest.
"I reiterate that Shahrol was serving Jho Low’s interest, and Jho Low’s interest alone, and the matters contained in those so-called talking points were actually scripts to be rehearsed and repeated by them to mislead and misrepresent the matters to the MOF and the board of directors," Najib said.
In this trial, Najib is accused of four abuses of power and 21 money-laundering charges.
The trial before Sequerah continues.
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