‘Someone in AmBank helped Jho Low make RM494m from flipping 1MDB bonds in 2009’

TheEdge Thu, Oct 10, 2019 09:45am - 4 years View Original


KUALA LUMPUR: Someone in AmBank may have conspired with companies linked to Low Taek Jho (Jho Low) to make some RM494 million in profit from flipping 1Malaysia Development Bhd (1MDB) bonds on the day they were issued, said a lawyer acting for former prime minister Datuk Seri Najib Razak in the 1MDB-Tanore trial yesterday.

On May 27, 2009, two companies linked to fugitive financier Jho Low  acted as secondary subscribers to 1MDB’s RM5 billion Islamic Medium Term Notes and subscribed to the notes at a discounted price of RM4.5 billion from 1MDB via AmBank.

The two companies — Aktis Capital Singapore Pte Ltd and Country Group Securities Pcl — then appointed AmBank to resell the portion to local institutions at between par value and premium, senior defence counsel Tan Sri Muhammad Shafee Abdullah (pic) told the High Court.

Muhammad Shafee referred to a letter from AmBank to Aktis dated May 27, 2009, which confirmed that the net payable amount to Aktis was RM74.62 million.

According to the letter, Aktis had subscribed to RM700 million worth at a discounted RM617 million.

Aktis then appointed AmBank as a placement agent, which then helped the company dispose of the bonds at par value.

“Who were the losers of this deal? One is 1MDB, as they could have made that gain for themselves. AmBank only made the fees of about RM70,000. But we don’t know who was conspiring in AmBank,” said Muhammad Shafee.

“Some people arranged in Aktis for the discounted sale, for Jho Low’s outfit to make money.

“Malaysians got screwed twice as the bonds were sold at a discount and then sold at a higher value to Malaysian institutions — the Employees Provident Fund, Social Security Organisation and insurance companies [operating locally]” said Muhammad Shafee.

Separately, Country Group too bought portions of the bonds and resold them — through AmBank — at face value of around RM3.8 billion, to gain approximately RM420 million.

All this happened on the same day which AmBank helped 1MDB issue the RM5 billion bonds, according to documents shown by Shafee in court.

The question, Muhammad Shafee raised, was why AmBank did not make that killing itself.

AmBank, too, could have made hundreds of millions of ringgit by subscribing to the discounted bonds and selling them at a higher price — and it would have had the upper hand, considering it was the lead arranger and primary subscriber.

On Oct 10, 2009, Teng Chean Choy, who was head of treasury and markets at AmBank, told 1MDB board of directors at a meeting that the discount was to ensure full subscription considering poor market appetite.

The controversial bond issuance resulted in a series of boardroom changes in 1MDB (known as Terengganu Investment Authority until September 2009), after which its original shareholder, the Terengganu state government, receded ownership and let Putrajaya take over the fund.

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