FORMER prime minister Najib Razak instructed the Terengganu Investment Authority (TIA) to proceed raising RM5 billion through Islamic medium term notes in 2009, despite being told otherwise by then Yang di-Pertuan Agong Sultan Mizan Zainal Abidin, a witness in the 1MDB trial said today.

Former TIA CEO Shahrol Azral Ibrahim Halmi told the court that the order was given via TIA’s special adviser Low Taek Jho, better known as Jho Low, on May 27, 2009.

“I was informed by Jho Low (on the phone) that we are to follow Najib’s instructions, given to both of us previously on the night of May 22, 2009, that the Islamic medium term notes issuance must continue, even if there is opposition from other shareholders,” the witness told the Kuala Lumpur High Court.

Shahrol and former TIA director Ismee Ismail signed the bonds issuance agreement with AmInvestment on May 27, 2009.

Two days later, TIA received RM4.385 billion in net proceeds.

The witness told the court that the amount was reduced due to underwriting fees and other costs, which he did not have the details.

Najib is on trial for four counts of power abuse to enrich himself with RM2.3 billion from 1MDB and 21 counts of laundering the same amount.

Sultan Mizan opposed the bonds issuance

On May 22, 2009, Shahrol said he received a “surprising message” from the Terengganu palace in Kuala Lumpur.

“I was told by Sultan Mizan to make my way to the palace, along with Ismee, to appear before him immediately. I went straight to Terengganu palace after Friday prayers.”

In a meeting room in the palace, Shahrol and Ismee were shown resolution documents by Sultan Mizan and his sister Tengku Rahimah Almarhum Sultan Mahmud.

The documents were resolutions suspending the power and authorisation of Shahrol, Ismee and other executives from acting on the bonds issuance. The resolutions sought the immediate suspension of the proposed bonds issuance.

“As I recall, His Majesty ordered, ‘Please sign this resolution, you can read it if you want.’ I was speechless and I felt there was something wrong with Tuanku Mizan’s intonation, which seemed like he was upset.

“I looked at Ismee, and I did not say anything except to His Majesty why he was upset and had demanded that I sign the resolution. I was shocked by his order because Low had told me previously that Sultan Mizan did not oppose the bonds issuance.” 

Shahrol said it was at this meeting that Sultan Mizan used the phrase “unsavoury character”.

“However, I do not know who Sultan Mizan was referring to,” Shahrol said, adding that he does not know the cause of the clash between TIA stakeholders.

After the duo left, Shahrol said he called Low to inform him of the outcome of the meeting.

Low requested Shahrol to come to Najib’s residence at Langgak Duta the night of May 22, 2009.

Shahrol said he was informed by TIA executive director Casey Tang that the bonds issuance could not be stopped as the agreement had been signed.

AmBank relationship manager Joanna Yu also informed Shahrol that some bonds have been bought up during the book building exercise that had already begun.

“Withdrawing will be considered to be in breach of the agreement,” Shahrol told the court. 

Meeting at Najib’s house

Later that night, Shahrol went to Najib’s residence, where Low was also there.

To Najib’s questions, Shahrol said he did not know why Sultan Mizan was upset and that he received no copies of the signed resolutions.

After briefing Najib, the former prime minister said: “You go ahead, I will talk to Tuanku.”

Shahrol said he took it to mean that he was “mandated” by Najib, who was also finance minister, to continue with the bonds issuance.

On May 27, 2009, AmBank issued a letter to Shahrol informing him that the bank had responded to a letter by Tengku Rahimah Almarhum Sultan Mahmud, who is Sultan Mizan’s sister.

She had informed the bank that the bonds issuance was carried out without the prior approval of the Agong and sought its suspension.

Tengku Rahimah resigned from the board on May 27, 2009, Shahrol told the court.

“AmInvestment basically said that the IMTN (Islamic medium term note) could not be suspended as it would disrupt the market and carry a serious implication to the IMTN capital market,” Shahrol said.

Najib faces 20 years imprisonment if convicted. The 66-year-old accused is represented by a dozen lawyers led by Muhammad Shafee Abdullah.

Former Federal Court judge Gopal Sri Ram is leading the prosecution before Kuala Lumpur High Court judge Collin Lawrence Sequerah. – September 24, 2019.