THE prosecution in the 1Malaysia Development Bhd (1MDB) case today reminded the defence team that the RM5 billion bond issued by the Terengganu Investment Authority (TIA) was done at the instructions of Najib Razak. 

Deputy public prosecutor Mohamad Mustaffa P. Kunyalam objected to defence lawyer Hariharan Tara Singh’s line of questioning of Ismee Ismail, former director of 1MDB.

Hariharan today asked Ismee about former 1MDB chief executive officer Shahrol Azral Ibrahim Halmi’s role in the issuance of the TIA bond. Shahrol was on the witness stand for more than a year. 

“Counsel must be fair in addressing the witness because Sharol did say he received instruction from the accused to proceed with the Islamic medium-term notes (IMTN),” Mustaffa told judge Collin Lawrence Sequerah.

“That shouldn’t be put to the witness (Ismee).”

The judge also questioned Hariharan on why these queries were being posed to Ismee when Shahrol had been questioned.

“Shahrol has been confronted,” the judge said. 

Hariharan told the judge that he was asking these questions because Ismee was a member of the board of TIA, who also opposed the issuance of the bond.

“The reason these questions are posed is because he was a member of the board. I may raise the same questions to Tan Sri Bakke (Mohd Bakke Salleh, former TIA director) when he is here.

“The board said no, Tuanku (Terengganu’s Sultan Mizan Zainal Abidin) said no and then there was a series of events taking place and executed by Shahrol,” Hariharan said.

The judge then allowed Hariharan to continue with his line of questioning.

Hariharan asked Ismee why TIA proceeded with the issuance of the IMTN when they had signed a resolution to discontinue it at the behest of the Terengganu ruler.

At the time, the sultan had said his “interest and concern are the well-being of my state and of my people” and he also mentioned something about an “unsavoury character” but did not name the individual.

“Me and Shahrol were summoned to the place and we signed the resolution presented to us.

“After that, Shahrol told me that they have to proceed with the IMTN issuance because ‘they had already pushed the button’.”

Shahrol, when he took the stand, had explained that Najib had instructed him to proceed with the IMTN issuance despite signing the resolution to suspend it.

In his witness statement, Shahrol said that after explaining to Najib what happened with Sultan Mizan, Najib said: “You go ahead, I will talk to Tuanku.”

Shahrol said at the time, he took this as a mandate from Najib, who was prime minister and finance minister, to carry on with the IMTN. 

During this time, Najib was also the minister responsible for the government guarantee for the bond issuance.

Najib is standing trial for graft involving RM2.28 billion in 1MDB funds. He faces 25 charges – four for abuse of power and 21 for money-laundering – for offences committed between 2011 and 2013.

TIA was a predecessor of 1MDB, incorporated on February 27, 2009, with a start-up capital of RM1 million. The strategic wealth fund was meant to raise RM11 billion – RM5 billion through a government-guaranteed bond and another RM6 billion by the securitisation of Terengganu state’s oil royalties.

A major conflict that emerged between TIA’s stakeholders led to the transfer of ownership from the Terengganu state to the federal government.

TIA was taken over by the Minister of Finance (Inc), when Najib was the finance minister. In July 2009, TIA was transformed into 1MDB. – March 17, 2022.