KUALA LUMPUR, Sept 23 — The Terengganu Investment Authority (TIA) Berhad which later became 1Malaysia Development Berhad (1MDB) was a company that only had RM2 paid-up capital when it asked the federal government to guarantee a RM5 billion borrowing, the High Court heard today.

In the ongoing corruption trial against Datuk Seri Najib Razak, prosecution witness Datuk Shahrol Azral Ibrahim Halmi said he only joined TIA and was appointed to be TIA’s CEO on March 23, 2009 — almost a month after the company was set up.

Shahrol said he was not involved in the early stages of TIA’s formation but had researched on the company by reading up on its background and asking those within the company.

"From the research that I carried out, I found that TIA was established on February 27, 2009 with start-up capital of RM2,” Shahrol said.

Shahrol noted that TIA’s adviser Low Taek Jho or Jho Low had told him that the idea to set up the company was allegedly initiated together with Terengganu ruler Sultan Mizan Zainal Abidin, and that Low had said that TIA was intended to be a sovereign wealth fund like Abu Dhabi’s Mubadala.

After joining TIA, Shahrol said Low as the company’s fund-raising adviser and TIA executive director Casey Tang had informed him of the plan for the company to get the federal government’s guarantee for RM5 billion to be raised by the company, while also having the Terengganu government inject a planned separate sum of RM6 billion through oil royalties.

Four days on the job

Having joined TIA on March 23, 2009, Shahrol then confirmed that he had signed a directors circular resolution on March 25 to appoint AmInvestment Bank Berhad to be the lead arranger for the RM5 billion debts that TIA would be taking on in the form of Islamic medium-term notes.

Shahrol confirmed he had then on March 27 signed another directors’ circular resolution on the plan to get government guarantee for the RM5 billion borrowing, a point which lead prosecutor Datuk Seri Gopal Sri Ram highlighted.

Sri Ram: You joined TIA on 23rd March, four days earlier. How familiar were you with the affairs of TIA before this resolution?

Shahrol: Not very familiar.

Also on March 27, 2009, Shahrol as TIA CEO sent a letter to Najib who was the finance minister to apply for the government guarantee of the RM5 billion borrowing, but said Low was the one who prepared the letter.

"I did not prepare this letter. This letter was finalised by Jho Low who asked me to see this letter and sign this letter in my capacity as TIA CEO then,” Shahrol said.

Datuk Seri Najib Razak arrives at the Kuala Lumpur High Court September 23, 2019. ― Picture by Ahmad Zamzahuri

Shahrol said he had signed on to the letter, as Low had told him of Mubadala’s interest to jointly invest in a luxury hotel project in Pulau Bidong in Terenggany and that there was a need to speed up TIA’s fund-raising through bonds to enable the investment.

Shahrol shared the characteristics of Low’s style for letters or documents, including his use of bullet points, choice of salutation and words such as "secure world-class investments”, bolding and emphasis of words.

Low wanted to speed up

As a RM2 company in its early days, Shahrol said TIA did not have any funds and was unable to get credit as a new company, and took up Low’s offer to use the meeting room in the latter’s company UBG’s office at the Petronas Twin Towers as an office space.

Shahrol spoke of how Low as TIA adviser had pressured for the RM5 billion borrowing via Islamic Medium Term Notes (IMTN) to be done, and that the latter had cited alleged push from the Terengganu state government and Najib ot the federal government to expedite the fund-raising for the company that had started operations without any money.

"Jho Low as senior officer at UBG asked almost every day about the progress of the IMTN programme,” Shahrol said, believing that Low had received instructions from the two governments as stakeholders to speed up the issuance of the IMTN.

Shahrol today detailed various documents that included letters between him and the Finance Ministry, including an April 26, 2009 letter to Najib that Low prepared and Shahrol signed regarding the RM5 billion government guarantee.

In this April 26, 2009 letter, Shahrol said TIA had informed the Finance Ministry of late May 2009 as the proposed "target date” for the IMTN to be issued, acknowledging the target date application was "very aggressive” and had caused discomfort for the ministry.

"This is because the target date was a short timeframe of one month only from the date of the letter April 26, 2009 to the target date of late May 2009,” he said, noting that Low had said the deadline was necessary for the Mubadala investment to happen.

Shahrol said Low had shown him "seemingly solid plans” to develop the island and that it justified the urgency to quickly secure the government guarantee.

"Jho Low asked me to push MOF, he told me he will push MOF from top down,” he said, explaining that "top down” would mean a directive would be given by Najib himself as the finance minister for the approval of the government guarantee but also said he did not know if this was actually done.

Shahrol said then Treasury secretary-general Tan Sri Wan Abdul Aziz Wan Abdullah had in an April 30, 2009 letter said the federal government had agreed to issuing a government guarantee if the Terengganu government issues a letter of comfort first.

Shahrol said TIA had on May 4, 2009 then wrote a letter to Najib, noting that he had copied it to Wan Abdul Aziz as taught by Low to make the top ministry official feel "bound” to speed up the government guarantee for the RM5 billion.

On May 5, 2009, Wan Abdul Aziz issued a letter to TIA to inform of five conditions to be fulfilled for Putrajaya to give its government guarantee, including to have the TIA always owned by the Terengganu government’s Mentri Besar Incorporated.

The other conditions were for the Finance Ministry to have a special share in TIA and for the ministry to approve all IMTN documents; a letter of comfort to be issued by the Terengganu state government; and for TIA to increase its capital to RM200 million within 90 days of the issuance of the first IMTN.

Shahrol had today also spoke of how Najib and Low had close ties to each other.

He will continue testifying tomorrow, which will also be the 12th day of Najib’s trial before High Court judge Collin Lawrence Sequerah.

Najib’s ongoing 1MDB trial involves 25 criminal charges — four counts of abusing his position for his own financial benefit totalling almost RM2.3 billion allegedly originating from 1MDB and the resulting 21 counts of money-laundering.