Govt has to pay off 1MDB’s US$3bil loan debt, Najib’s trial told

KUALA LUMPUR: A former Finance Ministry deputy secretary-general told the High Court here today that the government was still paying off a US$3 billion loan taken by 1Malaysia Development Berhad (1MDB) nine years ago.

Datuk Siti Zauyah Mohd Desa, 63, who was then attached to the Loan Management, Financial Market and Actuary Division division (BPKA) said the US$3 billion loan was approved by the government via a support letter signed by Datuk Seri Najib Tun Razak (pix), who was Finance Minister back in 2013.

The 26th prosecution witness also confirmed that the division had not received any reports whatsoever from 1MDB on how the money was spent or used.

“I confirm that 1MDB, as the party that took a loan totaling US$3 billion, had failed to make the loan payments as per the stipulated terms. This has caused the government today to bear the 1MDB debt based on the support letter issued by the government and signed by the Finance Minister (Najib),” he said.

The US$3 billion was raised from bonds issued by 1MDB’s subsidiary, 1MDB Global Investment Ltd (1MDB GIL), for a 50:50 joint venture between 1MDB and Aabar Investments PJS.

Prior to this, the court was told that the debt should have been paid in full by 2023.

Reading out her witness statement at the former prime minister’s trial on the misappropriation of RM2.3 billion in funds from 1MDB, Siti Zauyah said BPKA then was responsible for obtaining reports from 1MDB.

However, she added that during her tenure at the division, she had not received any counter-report from the 1MDB management regarding the use of the US$3 billion in funds.

“1MDB is responsible for submitting investment reports as stipulated in the application for the letter of support to the Ministry of Finance.

“On our side, we had contacted the 1MDB representative then, Zahid Taib for them (1MDB) to provide feedback, submit documents or reports to the Finance Ministry, however, they never did,” she said.

“I also confirm that I myself have never seen the agreement document between 1MDB and Aabar as stated in their application because 1MDB did not report to my division at that time. Among the documents we requested consistently were 1MDB’s audited financial reports, a copy of which must be provided to the Finance Ministry, but they failed to do so,” she said.

Siti Zauyah said there are policies that stipulate that Minister of Finance Incorporated (MoF Inc) companies who wished to enter into any joint venture or investment agreements with external parties, must be presented to the MoF Inc division after which the division will prepare approval papers from the Finance Ministry and subsequently for cabinet approval.

“This is the existing policy and process. In the case of 1MDB, I confirm that 1MDB did not submit a report for them to enter into a joint venture agreement with Aabar as referred to in my testimony today,” Siti Zauyah said, adding that she was not sure whether 1MDB had received special approval from the Finance Minister on the joint venture.

She said once the support letter was issued to 1MDB in 2013, the Finance Ministry no longer issued any guarantee documents to 1MDB.

On the running of the 1MDB, which had been placed under the control of MoF Inc, the witness confirmed that no officers from the Finance Ministry or from the MoF Inc division had been appointed to be 1MDB board members.

She said this was because in other MoF Inc companies (other than 1MDB), the Finance Minister was not directly involved, as to how his role was in 1MDB, in which Finance Minister (Najib) had appointed himself as the 1MDB Advisory Board chairman.

“I confirm that in other MoF Inc companies, these sort of situations do not happen,” the witness said, while adding that 1MDB had been in regular contact with Najib if the BPKA division had requests or views pertaining to the matters concerning the support letter for the US$3 billion loan.

Najib, 68, is facing four charges of using his position to obtain bribes totaling RM2.3 billion from 1MDB funds and 21 charges of money laundering involving the same amount.

The trial before judge Datuk Collin Lawrence Sequerah continues tomorrow. — Bernama