The former Bank Negara Malaysia (BNM) governor said that the compound was imposed on 1MDB with the agreement of the Attorney-General’s Chambers, and was paid in full by the state-owned company on May 25, 2016.

“They (1MDB) informed us that they had placed the money overseas in order to pay for their debts.

“We (BNM) said we will accept it (the explanation), if they can provide documentation on the status. But they were not able to provide (information on) where the money was kept (and) what form in took,” Zeti added.

She said that by paying the compound, 1MDB “essentially admitted” it had no investments and money abroad.

Zeti also informed the court that 1MDB had, in 2014, applied to BNM for permission to borrow approximately RM4.9 billion in funds from offshore sources.

“We rejected this application because of their high level of debt.

“They were not happy and filed an appeal (through an internal process),” Zeti said, adding that the appeal was also rejected.

Najib is standing trial on 25 charges of abuse of power and money laundering of funds amounting to over RM2.28 billion, allegedly belonging to 1MDB, that were deposited into his AmBank accounts between February 2011 and December 2014.

The hearing before Justice Collin Lawrence Sequerah continues tomorrow.