Govt has to pay off 1MDB’s US$3b loan to fund for TRX

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Letter of support was crucial for issuing US$3 billion bond.

  • 1MDB never submitted any report on its joint venture with Aabar for TRX to MoF Inc
  • No govt reps were appointed as 1MDB directors, despite the company being a part of MoF Inc
  • Finance minister was never directly involved in other MoF Inc companies, unlike 1MDB
  • Najib appointed himself as board of advisers’ chairman, which does not happen in other government-owned companies

The government has to pay off a US$3 billion loan taken by 1MDB to fund the Tun Razak Exchange (TRX) project, a former senior official in the finance ministry told the High Court in Najib Razak’s 1MDB trial.

Siti Zauyah Mohd Desa, the Treasury’s former deputy secretary-general, said the government served as the guarantor for the loan.

Bernama

“The prime minister signed a letter of support in 2013 for this loan. 1MDB has failed to repay this US$3 billion as stated under the loan’s terms,” she said.

The court heard that 1MDB entered into a joint venture with Aabar Investment PJS in 2012 to develop TRX. Goldman Sachs helped 1MDB to raise the US$3 billion through bonds.

The prosecution contended that part of the US$3 billion, or US$681 million, was transferred to Najib’s bank accounts between March 21 and April 10, 2013.

Siti Zauyah also told the court that 1MDB had never submitted any report on its joint venture with Aabar for TRX to the finance ministry’s unit, Minister of Finance Incorporated (MoF Inc).

“Any government-owned company that wanted to enter into a joint venture with other foreign entities needed to submit a report to MoF Inc so we could present it to the finance minister (Najib) and for him to get the Cabinet’s approval.

“For 1MDB, I am not sure if it received ‘special approval’ from the finance minister on TRX,” she said.

She also said no government representatives were appointed as 1MDB directors, despite the company being a part of MoF Inc.

“The finance minister was never directly involved in other MoF Inc companies, unlike 1MDB.

“He appointed himself as the board of advisers’ chairman. This does not happen in other government-owned companies,” she said.

Najib is standing trial for 25 charges of abuse of power and money laundering over alleged 1MDB funds amounting to RM2.28 billion deposited into his AmBank accounts between February 2011 and December 2014.

The hearing before High Court judge Collin Lawrence Sequerah continues. – FMT