Jho Low told AmBank of 1MDB set-up 2 years before it was formed, court told

The Kuala Lumpur High Court was today told that fugitive businessman Low Taek Jho or Jho Low informed AmBank that his team was looking to set up a sovereign wealth fund – the predecessor of 1MDB – to raise funds to develop the state of Terengganu, two years before it was officially formed.

Joanna Yu Ging Ping, 51, a former relationship manager at the bank, said she was introduced to Jho Low, Tan Vern Tact, and Nik Faisal Ariff Kamil by her then team leader, Chan Wan Seong, in 2007.

Initially established in 2009 as an entity owned by the Terengganu state government, the Terengganu Investment Authority (TIA) was later renamed as 1MDB.

Yu said she was introduced Jho Low when she was assigned by Chan to handle the loans of Majestic Masterpiece Sdn Bhd some time in 2007.

"The company was looking to acquire the shares of two other companies, namely Loh & Loh Corporation Bhd and Putrajaya Perdana Bhd. Majestic Masterpiece was owned by Wynton Private Equity Group and Abu Dhabi Kuwait Malaysia Investment Corporation. Jho Low was one of the directors of Wynton Private Equity Group. 
 
"Not long after the Majestic Masterpiece loan was approved by the bank and the acquisition of the entities above 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," she said.

The 41st prosecution witness said this when reading out her witness statement at Najib Razak’s corruption and money laundering trial involving RM2.3 billion belonging to 1MDB.

She said she then attended a meeting in 2009 with Jho Low and several others to come up with the related bond issuance.

The others who attended the meeting were Casey Tang and Shahrol Azral Ibrahim Halmi, a number of AmBank officers such as Chan, as well as several members of the bank’s debt capital market division.

Tang would later become 1MDB’s business development executive director and Shahrol would become the fund’s CEO.

"In this meeting, Jho Low and Tang asked many questions and inquired about the typical issues involved in the issuance of a bond, the structures and the timeline to issuance. We were initially asked to provide a proposal for a RM10 billion-bond issuance with a 30-year tenure.

"My colleagues from the treasury and debt capital market division shared that there might not be enough investors for the size of RM10 billion and that a 30-year bond tenure in Malaysia was also unprecedented. 

"There were several suggestions discussed, including to obtain a government guarantee for the bonds, to reduce the size of the bond issue, and to shorten the tenure of the bond. Following this meeting, there were several other discussions.

"Eventually the client (TIA) agreed to a reduced issuance size of 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 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," said Yu, adding that once the issuance of the bond was agreed on, TIA opened an account at AmBank for the purpose of receiving the bonds’ proceeds.

Najib, 69, faces four charges of using his position to obtain bribes amounting to RM2.3 billion belonging to 1MDB and 21 charges of money laundering involving the same amount.

The trial before judge Collin Lawrence Sequerah continues.