KUALA LUMPUR (Oct 13): Former AmBank customer relationship manager Joanna Yu Ging Ping testified in the 1Malaysia Development Bhd-Tanore (1MDB-Tanore) trial that fugitive financier Low Taek Jho or Jho Low approached AmBank in 2009 for an “unprecedented” RM10 billion bond issuance, with a 30-year tenure, for a sovereign wealth fund to develop Terengganu.
The entity would eventually become 1MDB.
Testifying in the trial where former prime minister Datuk Seri Najib Razak is charged with misappropriating RM2.28 billion of 1MDB funds, Yu said that she first met Jho Low in 2007 while she was assigned by her then team leader Chan Wan Seong to handle loans of Majestic Masterpiece Sdn Bhd.
Majestic Masterpiece was looking to acquire the shares in two other companies, namely Loh & Loh Corp Bhd and Putrajaya Perdana Bhd.
Majestic Masterpiece is owned by Wynton Private Equity Group and Abu Dhabi Kuwait Malaysia Investment Corp (ADKMIC). Jho Low was one of the directors of Wynton.
"Not long after the Majestic Masterpiece loan was approved by the bank, and the acquisition of the entities completed, Jho Low informed the bank that his team was looking to set up a sovereign wealth fund to raise funds to develop the state of Terengganu," Yu testified.
The assistance sought from the bank was in relation to submitting a bond issuance proposal for the sovereign wealth fund.
An initial meeting was held in 2009 between Jho Low, former 1MDB director Casey Tang, former 1MDB chief executive officer Datuk Shahrol Azral Ibrahim Halmi, Yu and AmBank officers Teng Chean Choy, Seohan Soo and Chan.
It was in this meeting that Jho Low and the company asked the bank to provide a proposal for a RM10 billion bond issuance, with a 30-year tenure.
“In this meeting, Jho Low [and Tang] asked many questions, and inquired about the typical issues involved in the issuance of a bond, the structure and the timeline of the issuance. We were initially asked to provide a proposal for a RM10 billion bond issuance, with a 30-year tenure," the witness testified.
“My colleagues from the treasury and debt capital market division said that there may not be enough investors for the size of RM10 billion, and that a 30-year bond tenure in Malaysia was unprecedented,” Yu said, reading from her witness statement.
She said that several suggestions were discussed in the meeting to raise the funds, and among them was to obtain a government guarantee for the bond, to reduce the size of the bond issue, and also to shorten the tenure of the bond.
Eventually, the client settled on a RM5 billion government guarantee bond for a period of 30 years.
"I am not sure who made the decision to have a government guarantee for this bond, but as far as I know, the bank’s treasury/debt capital market division did share that a government guarantee may be required for a bond period exceeding 20 years. Normally, it is the customer who makes the final decision on the bond structure, and for 1MDB, the client was instrumental in procuring the government guarantee for the bond," Yu testified.
The witness said that eventually, Terengganu Investment Authority (TIA) — the sovereign wealth fund and former iteration of 1MDB — opened an account at the bank for the purpose of receiving the proceeds.
TIA had endeavoured to raise RM5 billion in Islamic medium-term notes (IMTN) with AmInvestment Bank Bhd to lead the issuance.
However, Sultan Mizan Zainal Abidin of Terengganu was dissatisfied with TIA, and wanted to suspend the IMTN issuance.
Because of the Sultan's reluctance over the RM5 billion bond issuance, TIA was taken over by Minister of Finance Inc, where Najib was the finance minister, from Terengganu Menteri Besar Inc. In July 2009, TIA was transformed into 1MDB.
Najib is currently facing 25 counts of money laundering and abuse of power for alleged misappropriation of 1MDB funds.
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