1MDB Trial: TIA Issued RM5b Notes Without Terengganu State’s Approval

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TERENGGANU Investment Authority (TIA), the predecessor of 1Malaysia Development Bhd (1MDB), had issued RM5 billion Islamic notes without the consent of the state government, the Kuala Lumpur High Court heard yesterday.

On the eighth day of the trial of former Prime Minister (PM) Datuk Seri Mohd Najib Razak’s (picture) 1MDB case, his defence counsel brought to the witness’ attention the documents that showed the Terengganu state’s dissatisfaction over a certain RM5 billion sukuk issuance.

One of the documents was a letter by Menteri Besar Inc (MB Inc) of Terengganu to Najib as the then finance minister, which stated that the decision to issue RM5 billion Islamic mediumterm notes was made without representation from the state.

In the letter signed by former Terengganu MB Datuk Ahmad Said, MB Inc had requested for the bond issuance to be suspended.

At the material time, parts of the Islamic bonds were already subscribed.

The court also heard that the bond issuance had gone against the letter of comfort the state was supposed to provide prior to the government-guaranteed facility.

However, the prosecution’s eighth witness Datuk Amhari Efendi Nazaruddin said he had no knowledge over the displeasure by Terengganu.

Terengganu was later given three options by the federal government, including to let go the control of TIA.

Ex-1MDB CEO Datuk Shahrol Azral Ibrahim Halim was the one who suggested to Najib for TIA’s name to be changed to 1MDB.

TIA was a brainchild of the then 13th Yang di-Pertuan Agong Sultan Mizan Zainal Abidin, who is the Sultan of Terengganu.

The state investment arm planned to raise an RM11 billion of start-up capital, of which RM6 billion would be backed by the state’s oil royalties.

Amhari Efendi said Low Taek Jho, or better known as Jho Low, had been involved in TIA in its early days, including a plan to form a joint venture with Mubadala Investment Co.

Other proposals included a partnership with Qatar Investment Authority and Kuwait Investment Authority, according to documents showed by the defence.

Amhari Efendi, however, could not confirm on these two sovereign wealth funds’ partnership ideas.

Lead defence counsel Tan Sri Dr Muhammad Shafee Abdullah also revealed that Jho Low had proposed hotshots to be in TIA’s board of advisors, including former Kuwaiti deputy PM Mohammad Sabah Al-Salem Al-Sabah, General Electric Co ex-CEO Jeffrey Immelt, LVMH Moët Hennessy chairman and CEO Bernard Arnault, and Walt Disney Co ex-CEO Michael Eisner, according to a letter by Shahrol Azral to Najib.

Amhari Efendi could only recall Arnault but he did not know whether either Arnault or any of those people were ever appointed as the board of advisors along Sultan Mizan and Najib.

Muhammad Shafee argued that the big names were merely picked by Jho Low to impress the state government and it was a con job.

For TIA Foundation’s board of trustees, Jho Low suggested the Queen Rania of Jordan and Najib’s wife Datin Seri Rosmah Mansor as members.

Amhari Efendi was also asked to identify Najib’s stepson Riza Shahriz Abdul Aziz, ex-1MDB CEO Arul Kanda Kandasamy and former chairman Tan Sri Lodin Wok Kamaruddin, who were among seven key people who appeared in court.