Court told Najib’s bank account opened in 2011, defence claims money from 1MDB predecessor’s RM5b bond could not have gone there

KUALA LUMPUR, March 21 — Former prime minister Datuk Seri Najib Razak could not have received money originating from a RM5 billion bond issued in 2009 by 1Malaysia Development Berhad’s (1MDB) predecessor Terengganu Investment Authority (TIA), his defence argued in the High Court today.

Najib’s lawyer Tan Sri Muhammad Shafee Abdullah claimed that this was because Najib’s bank account in AmBank was only opened in 2011.

Shafee suggested this while cross-examining the former director of both TIA and 1MDB, Tan Sri Ismee Ismail.

Ismee was testifying as the 13th prosecution witness in Najib’s trial over the misappropriation of more than RM2 billion of 1MDB funds.

Shafee today focused on events that took place before TIA was renamed as 1MDB in September 2009, including a May 2009 fund-raising exercise where TIA took on debts by issuing a RM5 billion bond via Islamic medium term notes (IMTN).

Shafee referred Ismee to various transactions including how TIA lost out when two companies made alleged secret profits by flipping portions of TIA’s RM5 billion bond, citing business publication The Edge’s June 24, 2019 article.

Shafee: Now it is important, because it has got a serious bearing on Datuk Seri Najib’s defence, so I appreciate you be as candid as possible. If you can remember, the more the better. Thus far, did you see from the transactions I have shown you, did you see any money from this IMTN has ever gone into the kitty or bank account of Datuk Seri Najib, from what I have just shown you?

Ismee: No.

Deputy public prosecutor Mohamad Mustaffa P. Kunyalam objected at this point, saying The Edge news report does mention payment to Najib and his stepson Riza Shahriz Abdul Aziz.

The Edge’s report had cited the US Department of Justice in saying that money stolen from 1MDB flowed through companies controlled by the fugitive Low Taek Jho and his associate Eric Tan Kim Loong, also reporting that these companies had for instance gave US$1.2 million to Riza to purchase a rare Hollywood poster and US$1.278 million to Najib’s AmBank account in June 2014.

Shafee however argued that those reported payments were in relation to other bonds and other transactions and were unrelated to the RM5 billion bond issued by TIA via IMTN, insisting that monies that went into Najib’s account were purportedly a “donation” from the Saudi.

“Yes, when we deal with Aabar, it’s the next phase. This has nothing to do with that. IMTN, the RM5 billion bond, nothing went to Datuk Seri Najib’s account, nothing. It is very important, we wanted to establish that, because the money started going into Datuk Seri Najib’s account only because of the arrangement of the donation.

“After the meeting, this money came in. Why it came in, it’s for somebody else to answer. Because as far as my client is concerned, he had this impression... donation money coming in, which will include seven transactions, the seven initial transactions came from Saudi’s Ministry of Finance,” Shafee said.

“And Yang Arif, what is more obvious, the AmBank account of Datuk Seri Najib only opened on January 13, 2011, so that cannot possibly have any connection to IMTN,” Shafee said.

When asked again if it appeared that no one else seemed to benefit from the RM5 billion fund-raising exercise apart from fugitive Low Taek Jho and an individual known as Cheah Teik Seng and that the money did not go to Najib, based on what Shafee had shown, Ismee agreed.

The Edge article that Shafee had shown Ismee had referred to how AmBank had in May 2009 sold RM3.8 billion of TIA’s RM5 billion bond to Country Group Securities Plc which bought them for Low and RM700 million of the same bond to Aktis Capital Singapore Pte Ltd for its client known as Morningstar Equities Inc, with the two companies having bought the bonds at a discount of over 12.08 per cent (at RM87.92 against the face value of RM100) and flipping the bonds by selling them off (at between RM100 to RM105) to make hundreds of millions in ringgit in profit. Shafee named Cheah Teik Seng as a director of Aktis Capital, while The Edge also reported Morningstar Equities as being linked to Vincent Cheah Chee Kong and Shaik Aqmal Shaik Allaudin.

Shafee today also focused on claims that Low had diverted money linked to the RM5 billion TIA bonds in 2009 to former Bank Negara Malaysia governor Tan Sri Zeti Aziz's family.

While Shafee had focused on the events that surrounded TIA’s RM5 billion bond, Najib’s 1MDB trial is actually on events and transactions relating to 1MDB. In this trial, Najib was accused of having committed corruption offences by allegedly misusing his position in the years 2011 to 2014, and of having committed money laundering offences in 2013.

On the first day of trial, the prosecution had said it would show that US$20 million (RM60,629,839.43) of 1MDB-linked funds was sent to Najib’s account in 2011, and that it would also show that a sum totalling RM90,899,927.28 from such funds went to Najib in 2012, and an alleged US$681 million (RM2,081,476,926) went to him in 2013, and that a sum amounting to RM49,930,985.70 also allegedly went to his account in 2014.

Najib’s 1MDB trial before High Court judge Datuk Collin Lawrence Sequerah resumes this afternoon.