Mazidah Abdul Majid, who served as the Cabinet’s deputy chief secretary until June 2018, said that the memorandum was first tabled to the Cabinet on April 1, 2009.
Najib held the finance minister’s position at the time and succeeded Abdullah Ahmad Badawi as prime minister two days later.
“The Cabinet was informed of the last meeting held on Dec 12, 2008 on TIA’s formation. The state investment fund was to borrow RM5 billion domestically and another RM6 billion would come from oil royalties owed to the state by Putrajaya.
“The ministers then agreed to provide a government guarantee to TIA for them to issue RM5 billion through Islamic medium-term notes (IMTN),” Mazidah said.
The Cabinet also agreed for the finance minister (Najib) to be given the authority to decide on the loan’s terms and conditions.
At another meeting held on June 3, 2009, Mazidah said the Cabinet was told that then Yang di-Pertuan Agong Sultan Mizan Zainal Abidin had instructed the federal government to relook at the issuance of RM5 billion in bonds.
Then deputy prime minister, Muhyiddin Yassin, chaired the meeting on behalf of Najib, who was on working trips to China and South Korea.
“His Majesty instructed the Cabinet to prepare two reports, namely ‘Unauthorised Issuance of IMTN by TIA’ and ‘Report on Managing Oil Royalty for the State of Terengganu Darul Iman as a Sovereign Wealth Fund With The Best Corporate Governance Practice and Transparency’.
“The ministers agreed for the Treasury to look into the issues raised in both reports,” Mazidah said.
The witness said in the subsequent meeting on June 10, 2009, Najib had returned home and chaired the Cabinet meeting.
“The prime minister told the Cabinet that he met Sultan Mizan earlier that day and His Majesty supported TIA’s concept as it can help the east coast state to generate income.
“His Majesty had consented for TIA to proceed with the issuance of the bonds.”
However, at a meeting on July 15, 2009, the federal government agreed to take over TIA from Terengganu. It was then renamed 1Malaysia Development Bhd, or 1MDB.
Meanwhile, the witness said Najib’s administration had, during a meeting in February 2013, agreed to issue a letter of support for 1MDB so they could get a RM3 billion loan through bond offerings.
The RM3 billion was meant for 1MDB to enter a joint venture with Aabar Investment in 2013.
“The Cabinet deliberated on providing assistance to 1MDB’s special purpose vehicle subsidiary 1MDB BVI Co, in the event 1MDB BVI could not service the loan,” Mazidah added.
The hearing continues tomorrow before High Court Judge Collin Lawrence Sequerah.
Najib’s lawyer Muhammad Shafee Abdullah told the court he wanted Mazidah to produce several documents related to Code of Ethics for members of the administration and members of Parliament at the next hearing date.