The High Court was today told that the government had taken the responsibility of paying 1MDB debts amounting to US$3 billion if the company failed to do so.
Former 1MDB non-executive director Ismee Ismail, 57, said this when referring to the government’s letter of support to 1MDB dated March 14, 2013 signed by former prime minister Najib Razak who was also the finance minister at the time.
He said the letter stated that the Malaysian government had taken note that 1MDB’s subsidiary, 1MDB Global Investment Ltd (1MDB GIL), would be raising US$3 billion through a bond issuance to be paid in full in 2023.
“This document (letter) explains that if 1MDB GIL is unable to pay or if there is a shortfall in paying this debt, 1MDB will provide financial assistance to pay the debt.
“Besides that, if 1MDB fails to pay the debt, then the Malaysian government will take the responsibility of financing 1MDB to pay the debt or directly pay the debt until it is settled.
“In other words, this letter was like a strong support from the Malaysian government to pay US$3 billion in bonds with interest created by 1MDB through 1MDB GIL,” he said, adding that the letter of support was issued expeditiously by the government.
The 13th prosecution witness said this at the former prime minister’s corruption and money laundering trial involving RM2.3 million belonging to 1MDB.
Reading out a 111-page witness statement, Ismee said the approval for the US$3 billion fundraising was reached in a directors’ circular resolution (DCR) dated March 12, 2013 while a letter of support was issued on March 14, 2013.
The witness said almost all of the decisions reached by 1MDB to make the US$3 billion fundraising a success was through the DCR and the special right redeemable preference shareholders resolution (SRR).
“Supposedly, a decision can be made either through the board of directors meeting or through a DCR and SRR. However, if an immediate decision is required, then it will usually be made through DCR and SRR.
“I confirm that Najib’s powers as prime minister, finance minister and chairman of 1MDB’s advisory board were beyond the 1MBD board of directors, based on the provisions under Article 117 of the Memorandum and Articles of Association (M&A), (and any decision) regarding financial and investment affairs of companies involving national interests must be made by the PM (Najib),” said Ismee.
Najib, 68, is facing four charges of using his position to obtain bribes amounting to RM2.3 billion from 1MDB funds and 21 charges of money laundering involving the same amount.
The trial before judge Collin Lawrence Sequerah continues on Dec 13.