THE former Deputy Secretary-General of the Ministry of Finance Siti Zauyah Mohd Desa today told the Kuala Lumpur High Court that the current government is still paying the US$3 billion loan that was given to state-owned and 1Malaysia Development Berhad (1MDB). 

The loan was sanctioned by the then government after Najib Razak, who was the finance minister, signed off the letter of support in 2013. 

Siti Zauyah ,63, now retired, verified in court a letter of support signed by Najib as finance minister on March 14, 2013 to represent the Malaysian government in supporting 1MDB Global Investments Ltd (1MDB GIL) in issuing the US$3 billion bond.

The government had issued a letter of support acknowledging that 1MDB’s subsidiary 1MDB GIL would be raising US$3 billion via a bond issuance which was to be paid in full in March 2023.

The 26th prosecution witness, who was attached to the Loans Management, Financial Market and Actuary Division (BPKA) at the Finance Ministry, however said that the department did not receive any financial reports regarding the US$3 billion loan. 

“I confirm regarding the status of the loan amounting to US3 billion referred to in my testimony that 1MDB, as the party that made the loan amounting to US$3 billion, has failed to make the loan payments as per the stipulated terms.

“As a result, the current government has to bear the repayment of 1MDB’s debt based on the letter of support issued by the government signed by the Finance Minister (Najib),” she said when reading her witness statement.

Siri Zauyah also added that BPKA was then responsible for obtaining a report from 1MDB. 

However, she confirmed that during her tenure there, she had not received any counter-reports from the 1MDB management regarding the use of funds amounting to US$3 billion which it had obtained through letters of support from the government.

“1MDB is responsible for submitting their investment report as the purpose of the application for the letter of support is submitted to the Finance Ministry. 

“I was in touch with 1MDB’s representative at that time, Zahid Taib, for them to provide feedback, submit documents or reports to the Finance Ministry, but 1MDB did not submit any report to my division at that time,” she said. 

The US$3 billion was money raised from bonds issued by 1MDB’s subsidiary 1MDB GIL, for a 50/50 joint venture between 1MDB and Aabar Investments PJS.

Siti Zauyah also told the court that she had never seen any agreement documents between 1MDB and Aabar. 

“I also can confirm that I have never seen the agreement document between 1MDB and Aabar as informed in their application because 1MDB did not report to my department at that time.”

“Among the documents that I have consistently requested through my division is the audited financial report of 1MDB, of which they need to provide a copy to the Finance Ministry, but 1MDB failed to submit the document to my division, “she said, adding that she did not know how the funds were used. 

The witness explained that there is a policy set at the Finance Ministry which stipulates that Ministry of Finance (Incorporated) (MoF Inc.) companies that want to make any joint venture or investment agreement with external parties, must be presented to the MoF Inc. Division. 

She then said the MoF Inc. Division will prepare a letter to get the Minister’s approval and is later tabled for cabinet’s approval.

“These are existing policies and processes. In the case of 1MDB, I confirm that 1MDB has not submitted a report for them to enter into a joint venture agreement with Aabar.”

“I cannot be sure whether 1MDB had received special approval from the Finance Minister on the joint venture,” she said. 

She added that after the issuance of the letter of support to 1MDB in 2013, the Ministry of Finance no longer issued any guarantees to any MoF Inc. companies. 

In relation to the running of the 1MDB company, which has been placed under the MoF Inc., the witness confirmed that no officer from the Finance Ministry or the MoF Inc. division was appointed to be a Board Member in 1MDB. 

She said that the Finance Minister appointed himself to be the Chairman of the Advisory Board to 1MDB, where she claimed such practice is not applicable to other MoF Inc. companies. 

“In other MoF Inc. companies (besides 1MDB), the Finance Minister is not directly involved. 

“The Finance Minister had appointed himself to be the Chairman of the Advisory Board to 1MDB.

“I can confirm in other MoF Inc. companies, this kind of thing does not happen,” the witness said, adding that 1MDB company officials reported their operations directly to the then prime minister.

Najib is standing trial for corruption over the misappropriation of RM2.28 billion of 1MDB funds.

He faces 25 charges, four of abuse of power and 21 of money laundering, allegedly committed between 2011 and 2013. – June 15, 2022.