Issuance of LoS for RM13.8b loan for 1MDB done in haste, witness says

This is as the letter was issued without conducting any due diligence for the project cashflow

A FORMER Finance Ministry (MoF) deputy secretary general told the High Court today that the issuance of a government letter of support (LoS) to secure a US$3 billion (RM13.83 billion) loan for the joint venture (JV) between 1Malaysia Development Bhd (1MDB) and Aabar Investment BVI Co was done in haste.

Describing the issuance of the LoS as “a first of its kind” and “was done in great speed”, Datuk Siti Zauyah Mohd Desa (picture) said in her 25 years’ experience in the ministry, that was the first time an LoS was issued by the MoF without conducting a due diligence for the project cashflow.

“We had to do a Cabinet paper on the same day. The information that was given to us was not enough and we had to work within whatever limited information that we got.

“There was no current assessment on the JV investment. In fact, there was none, nothing for us to do due diligence,” she said during re-examination by senior deputy public prosecutor (DPP) Datuk Seri Gopal Sri Ram in former Prime Minister (PM) Datuk Seri Mohd Najib Razak’s trial for misappropriation of RM2.3 billion in funds from1MDB.

The US$3 billion loan was approved by the government via a support letter signed by Najib, who was the finance minister back in 2013.

The 26th prosecution witness said the projection of cashflow was one of the most important parts in the issuance of LoS for MoF to assess whether any investment was able to churn out the right kind of income to service the loan.

When asked by Sri Ram why she did not approach Najib herself to air her concerns over the issues surrounding the sovereign wealth fund, Siti Zauyah said she did not have direct access to the then PM.

“However, I did approach (then) Finance Minister II (Datuk Seri Ahmad Husni Mohamad Hanadzlah) but he did not want to get involved. I cannot bypass my bosses to go to the PM. It is also not the practice for an officer to go directly to the PM,” she said.

The senior DPP also questioned her about her previous testimony, where the witness said she was instructed by former Treasury secretary general Tan Sri Dr Mohd Irwan Serigar Abdullah to continue processing the LoS despite lacking the usual process of conducting due diligence.

Sri Ram: When you did what you did in relation to this LoS transaction, was it open to you to act in defiance to instructions by Mohd Irwan? Can you defy his order?

Siti Zauyah: I can advise him but it is really up to him whether to accept it or not…but he did tell me this (issuance of LoS) is urgent because it comes from the PM. I had to do it.

Najib is facing four charges of using his position to obtain bribes totalling 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 this afternoon. — Bernama


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