KUALA LUMPUR: Bank Negara had rejected an application from 1Malaysia Development Bhd (1MDB) for permission to borrow approximately RM4.9bil in funds from offshore sources in 2014, the High Court heard.
Former Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz testified that the application was rejected due to the company's high level of debt.
"They were not happy and filed an appeal (through an internal process)," Zeti said.
The appeal was also rejected, she added.
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The application for billions in ringgit funds was made on June 3, 2014, about a year before foreign financial regulators informed Bank Negara of the possibility of misappropriation on 1MBD's funds.
According to Zeti, the central bank could have given due consideration to 1MDB for the purpose of the application if it had saved its money overseas to pay its debts.
However, 1MDB had failed to give any information about any funds kept overseas as they were non-existent.
The former governor however said she could not ascertain whether 1MDB had submitted an appeal to the Finance Ministry, which was under Datuk Seri Najib Razak who was then the prime minister as well as finance minister.
She said Bank Negara did not receive any instructions nor was it contacted by Najib over the loan issue.
The court also heard that 1MDB was fined RM15mil by Bank Negara after it failed to repatriate its funds from abroad.
The company paid the fine in full on May 25, 2016.
By paying the fine, she said 1MDB had "essentially admitted" that it had no investments or money abroad.
Najib, 70, is on trial for 25 charges in total - four for abuse of power that allegedly brought him the financial benefit to the tune of RM2.28bil; and 21 for money laundering involving the same amount of money.
The hearing continues before Justice Collin Lawrence Sequerah on Thursday (Aug 17).
