KUALA LUMPUR: It took seven years for Bank Negara Malaysia to discover that some US$700mil from the 1Malaysia Development Bhd (1MDB) coffers were diverted to Good Star Ltd, a company linked to fugitive businessman Low Taek Jhow.
Former Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz said the time frame was not unusual.
“It takes years to detect such cases. It is a cumulative effort from all regulators all over the world, as well as an internal investigation on the money trail,” she said.
The 46th prosecution witness answered a question from lawyer Tan Sri Muhammad Shafee Abdullah, who remarked that seven years was “a long time”.
Zeti was on the stand for cross-examination by Muhammad Shafee, who represented Datuk Seri Najib Razak at yesterday’s RM2.28bil 1MDB graft trial.
“When Bank Negara’s supervisory team went in March 2015 (for an investigation based on intelligence from foreign financial regulators), they uncovered that it went to Good Star.
“The next inquiry was to identify who owned Good Star, and it was later revealed that Low owned it,” Zeti said.
The US$700mil was part of a US$1bil remittance that was supposed to go into two accounts: US$300mil into a J.P. Morgan SA account for 1MDB Petrosaudi Ltd (1MDB-Petrosaudi) and US$700mil into an RBS Coutts Bank Ltd account for PetroSaudi International (PSI) Ltd, for the purpose of a joint venture between 1MDB and PSI.
The court also heard that Bank Negara Malaysia had rejected 1MDB’s application for permission to borrow approximately RM4.9bil in funds from offshore sources in 2014, but it was rejected due to the company’s high level of debt.
“They were unhappy and filed an appeal (through an internal process),” Zeti said.
The appeal was also rejected, she added.
The application for billions in ringgit funds was made on June 3, 2014, about a year before foreign financial regulators informed Bank Negara Malaysia of the possibility of misappropriation of 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 monies overseas to pay its debts.
However, 1MDB had failed to give any information about any funds kept overseas, as they were nonexistent.
The former governor, however, said she could not ascertain whether 1MDB had submitted an appeal to the Finance Ministry under Najib, who was then the prime minister and finance minister.
She said Bank Negara Malaysia did not receive instructions, nor did Najib contact it over the loan issue.
Bank Negara Malaysia also fined 1MDB RM15mil 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 – four for abuse of power that allegedly brought him the financial benefit of RM2.28bil; and 21 for money laundering involving the same amount.
The hearing continues before Justice Collin Lawrence Sequerah today.
