FORMER prime minister Najib Razak approved bond issuance and a loan valued at RM11.4 billion to finance the purchase of energy firm Tanjong Energy Holdings Ltd from tycoon Ananda Krishnan in early 2012, the Kuala Lumpur High Court heard today.

Testifying at the 1Malaysia Development Bhd trial today, the former CEO of the state investment firm, Shahrol Azral Ibrahim Halim, said Najib had signed approval letters for a RM6.17 billion bridging loan and a US$1.75 billion (then RM5.23 billion) bond issuance to fund the acquisition of the independent power producer.

The witness said the RM6.17 billion was a syndicated bridging loan between 1MDB, and Maybank Bhd and RHB Bhd. 

Separately, Goldman Sachs was appointed as the bookrunner and arranger for the issuance of US$1.75 billion in 10-year bonds.

During his examination-in-chief, Shahrol told the court that it would not have been possible for either the loan or the bonds issuance to proceed without approval from Najib, in his capacity as finance minister.

The approval letters were handled by 1MDB’s then general counsel Jasmine Loo, who obtained Najib’s signatures, the witness said.

1MDB was then owned by Minister of Finance (MoF) Inc, which was headed by Najib. The former prime minister also served as chairman of 1MDB’s advisory board.

The 66-year-old 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. He faces up to 20 years’ prison upon conviction. 

When examined by senior deputy public prosecutor Gopal Sri Ram this morning, Shahrol confirmed that the bond issuance for the Tanjong Energy deal followed a meeting between Najib and former Goldman Sachs CEO Lloyd Craig Blankfein in New York on November 22, 2009.

Present at that meeting were Shahrol, 1MDB intermediary Low Taek Jho, commonly known as Jho Low, and former Goldman Sachs Asia CEO Tim Leissner. 

Shahrol said Najib and Blankfein discussed several areas, particularly the independent power producer sector.

He said Goldman Sachs prepared the deed of guarantee, cross-guarantee agreement, deed of trust, the arranger and agency agreements.

Shahrol told the court that the arranger fees from the energy deal amounted to “hundreds of millions in US dollars”. 

The 49-year-old witness said the deal was being rushed by Low, who wanted a new bank account to be created at Falcon Bank Ltd in Singapore, to receive the proceeds of the US$1.75 billion bonds issuance.

The bank was picked by Low and 1MDB executive director of finance Terence Geh, the witness said.

Shahrol said he was ordered to quickly “seal the deal” as there were ongoing high-level negotiations between the Prime Minister’s Office and Abu Dhabi’s crown prince.

The witness said he took the claim in “good faith”.

Sri Ram: After the purchase, has Tanjong Energy ever produced any income for 1MDB?

Shahrol: I can’t remember if there was any cash that flowed upwards after the acquisition. But the bulk of the profits should have come when we publicly listed the entity, which never happened.

Sri Ram: So, the public listing of Tanjong Energy never took place?

Shahrol: It never took place.

Last week, Shahrol told the court that it was during a meeting with the chief executive of Abu Dhabi’s sovereign wealth fund Mubadala in November 2011 that the proposal to buy Tanjong Energy came up. Present at the meeting was Low.

Shahrol said after an F1 race in Abu Dhabi, he attended a gala dinner where he sat with Mubadala Infrastructure Partners CEO Philip K. Haddad, who told him that Ananda Krishnan was interested in selling his share in Tanjong Energy.

Najib is represented by a dozen lawyers, led by Muhammad Shafee Abdullah.

Former Federal Court judge Gopal Sri Ram leads the prosecution, while Kuala Lumpur High Court judge Collin Lawrence Sequerah presides. – September 30, 2019.