Letter of support for US$3 billion loan for 1MDB issued in haste, court told

A former finance ministry deputy secretary-general told the High Court today that the issuance of a government letter of support (LOS) to secure a US$3 billion loan for the joint venture between 1MDB and Aabar Investment BVI Co was done in haste.

Siti Zauyah Mohd Desa, 63, said the issuance of the LOS was "a first of its kind" and "done in great speed". 

She also said that in her 25 years of experience in the ministry, it was the first time an LOS was issued by the ministry without due diligence for the project cash flow.

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

"There was no current assessment on the joint-venture investment. In fact, there was nothing for us to do due diligence," she said during re-examination by senior deputy public prosecutor Gopal Sri Ram at former prime minister Najib Razak’s trial for the misappropriation of RM2.3 billion in funds from 1MDB.

The US$3 billion loan was approved by the government via a support letter signed by Najib, who was the finance minister in 2013.
 
The 26th prosecution witness said the projection of cash flow was one of the most important parts of the issuance of an LOS for the ministry to assess whether an investment would be 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 about the issues surrounding the sovereign wealth fund, Siti Zauyah said she did not have direct access to the then prime minister.

"I did approach (then) finance minister II (Ahmad Husni Mohamad Hanadzlah) but he did not want to get involved. 

"I could not 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.

Sri Ram also questioned her about her previous testimony, where she said she was instructed by former treasury secretary-general Irwan Serigar Abdullah to continue processing the LOS despite lacking the usual due diligence process.

Sri Ram: When you did what you did in relation to this LOS transaction, was it open to you to act in defiance of the instructions by Irwan? Could you defy his order?

Siti Zauyah: I could advise him, but it was really up to him whether to accept it or not… but he did tell me this (issuance of LOS) was urgent because it came from the PM. I had to do it.

Najib, 69, faces 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 Collin Lawrence Sequerah continues.