1MDB-Tanore: Najib says he only learnt details of 2009 bond flip during trial

Sunday 19 Jan 2025

KUALA LUMPUR (Dec 3): Datuk Seri Najib Razak said he only learnt of a bond flip involving the first debt issued by 1Malaysia Development Bhd (1MDB) when it was known as the Terengganu Investment Authority (TIA), and how the proceeds of that flip went to Low Taek Jho (Jho Low) during the course of the 1MDB-Tanore trial.

He said this in the witness stand on Tuesday while addressing the first abuse of power charge levelled against him. The first charge, among others, touches on TIA's issuance of the RM5 billion Islamic medium-term notes (IMTNs).

Najib said that during his meeting with TIA directors Tan Sri Ismee Ismail and Datuk Shahrol Azral Ibrahim Halmi in 2009, Shahrol had informed him that the notes had been fully subscribed.

"It was only in these proceedings that I discovered Country Group and Aktis Capital Singapore Ltd were the subscribers Shahrol referred to.

"At that briefing with Shahrol and Ismee, I was not shown any documents to substantiate Shahrol’s statement about the IMTN being fully subscribed. Furthermore, it was only during this trial that I became aware that Country Group, as a subscriber, served as a conduit to facilitate payments of US$26,185,539 and US$113,426,210.73 to Acme Time — an entity linked to Jho Low," he said.

The bonds were bought at a discount of RM87.92 against its the face value of RM100 by Aktis in Singapore and Country Group in Thailand and re-sold merely days later to the Employees Provident Fund (EPF) and insurance providers like Prudential for about RM100-105. 1MDB only ended up with RM4.3 billion bond issuance.

On the stand on Tuesday, Najib also said he was only aware of the behind the scenes of the bond-flip through a 2019 article by The Edge, which had been cited throughout the trial.

The article is entitled, "1MDB Update: Two Malaysians, apart from Jho Low, profited from the 2009 1MDB bond flip".

Per the article, besides Jho Low, two other Malaysians — Vincent Cheah Chee Kong and Shaik Aqmal Allauddin, linked to an entity associated with Low, Morningstar Equities — also made money on the bond flip.

The article went on to highlight that AmBank in May 2009 sold RM3.8 billion of the bonds Country Group bought them for Jho Low.

AmBank took RM500 million for itself while the remaining RM700 million was placed out to Aktis Capital for its client, a British Virgin Islands company called Morningstar Equities Inc.

This is a significant episode in the 1MDB saga as the Terengganu ruler, Sultan Mizan Zainal Abidin, who was also the Yang Dipertuan Agong (YDPA), had instructed that the bond issuance be suspended.

Shahrol, however, went ahead with the issuance, which was backed by a government guarantee. This led to the federal government taking over the company, fashioning it into 1MDB.

Najib testified that he had informed the sultan that the bond issuance shouldn't be stopped as doing so would negatively impact the Malaysian bond market and investor confidence.

Najib also testified that he was not keen on the federalisation but noted that TIA had already agreed to be federalised in July 2009 through discussions with the sultan, TIA, Finance Ministry officials and Menteri Besar Terengganu Incorporated (MBTI), which owned TIA.

Previously, Bank Negara Malaysia analyst Adam Ariff Mohd Roslan had detailed that RM60.63 million, which is at the heart of the first abuse of power charge, was traceable to the IMTN bond issuance and its syndicated term loan in 2010.

In this trial, Najib is facing four abuses of power and 21 money-laundering charges.

The trial before presiding judge Datuk Collin Lawrence Sequerah continues.

Edited ByTan Choe Choe

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