Letter of support for US$3bil 1MDB bond done in haste, says witness
Published on: Tuesday, September 27, 2022
By:
FMT, V Anbalagan
Former Treasury deputy secretary-general Siti Zauyah Desa says no due diligence was carried out on 1MDB’s joint venture with Aabar Investment PJS. (Bernama pic)
Kuala Lumpur: The High Court here heard that a letter of support (LoS) issued by the government to enable 1MDB to secure a US$3 billion bond was done in haste.
The Treasury’s former deputy secretary-general, Siti Zauyah Desa, said this was the first time such a transaction had been done in an “abnormal” manner in her 25 years with the finance ministry.
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“As a result of the speed, procedures were not followed,” she said when re-examined by ad hoc prosecutor Gopal Sri Ram in Najib Razak’s 1MDB trial.
The 26th prosecution witness said there was no due diligence done on investment or projected cash flow.
“This (due diligence) is important for us to determine how much income will be churned out to service the loan (bond),” she said.
Zauyah said a Cabinet paper on the LoS to guarantee the bond was prepared and tabled on the same day, despite lacking required information.
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The LoS was signed by Najib in his capacity as finance minister in March 2013.
1MDB Global Investment Ltd, a subsidiary of 1MDB, wanted to obtain a US$3 billion (around RM13.8 billion) bond but the principal banker, Goldman Sachs, had suggested that the company obtain a LoS from the finance ministry.
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This money was to develop the Tun Razak Exchange (TRX) project on a joint venture basis with Aabar Investment PJS.
For a LoS to be issued by Putrajaya, it must first go through an internal process at the Treasury before being submitted to the Cabinet for approval.
Further examined by Sri Ram, Zauyah said she also took instruction from then Treasury secretary-general Irwan Siregar Abdullah.
Sri Ram: Was it open to you to defy his order?
Zauyah: I could only advise him. But he told me this was urgent and it came from the prime minister (Najib).
Sri Ram: What is the impression you got from Irwan?
Zauyah: It was an instruction.
Zauyah said she had also approached then second finance minister Husni Hanadzlah on the LoS, but he did not want to get involved.
She told the court she was not aware that Najib had informed Husni to keep his hands off of 1MDB.
Najib is standing trial for 25 charges of abuse of power and money laundering over alleged 1MDB funds amounting to RM2.28 billion deposited into his AmBank accounts between February 2011 and December 2014.
The hearing before judge Collin Lawrence Sequerah continues.
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