This article first appeared in The Edge Financial Daily on September 26, 2019

KUALA LUMPUR: Datuk Seri Najib Razak’s senior counsel said that the suspension of the RM5 billion Islamic Medium Term Notes (IMTN) issuance would have negatively impacted Malaysia’s ratings, which was why the former premier decided to proceed with the issuance.

Speaking to the press following the conclusion of day 13 of the 1Malaysia Development Bhd (1MDB) trial yesterday, Tan Sri Muhammad Shafee Abdullah said Najib had been told that the bonds were already issued at that point.

“Datuk Seri Najib was advised that the bonds had already been issued to nothing less than AmInvestment [Bank Bhd], which is AmBank. You can’t recall it — you can’t even suspend it because the bonds had been issued.

“That was the reason Datuk Seri Najib advised that the bonds cannot be suspended because Malaysia’s reputation in terms of bonds, financial credibility and ratings in the international market would go down the drain,” said the lawyer.

He said that was why Najib said to continue with the issuance but that he would speak to Sultan of Terengganu Tuanku Mizan Zainal Abidin.

Muhammad Shafee also claimed that the Sultan was not angry with Najib, but was instead upset by the way Terengganu Investment Authority was being run.

“He was upset because the state sovereign fund was put to risk because there was no proper management layout and no safeguard put in place. There was no representation from Terengganu either, in the form of MB Inc (Menteri Besar Inc) or from the state.

“These were some of the elements that he was upset about and told to stop the bonds. He didn’t say ‘I don’t want to do it at all’; he said suspend it before it goes any further because the state of Terengganu was being exposed,” he said.

On Tuesday, Datuk Shahrol Azral Ibrahim Halmi, 1MDB’s former chief executive officer and the ninth prosecution witness, testified that he was in a meeting with the Terengganu ruler and his sister Tengku Datuk Rahimah Puteri Mahmud on May 22, 2009, during which he was asked to sign a resolution to suspend the IMTN issuance.

The witness also said Tuanku Mizan was upset and referred to an “unsavoury character”, though it was unclear who he was referring to.