KUALA LUMPUR: The defence in Datuk Seri Najib Tun Razak's 1Malaysia Development (1MDB) trial today contended that fugitive businessman, Low Taek Jho or Jho Low had misappropriated funds belonging to the strategic investment company through the profit from the issuance of RM5 billion Islamic Medium Term Notes (IMTN) without Najib's knowledge.

Najib's counsel Tan Sri Muhammad Shafee Abdullah also contended at the High Court today that Najib did not receive money originating from the bond issued in 2009 by 1MDB predecessor, Terengganu Investment Authority (TIA) because the former premier's bank account in AmBank was only opened on January 13, 2011.

Former 1MDB non-executive director Tan Sri Ismee Ismail, who is the 13th prosecution witness agreed to the lawyer's contention that no proceeds from the IMTN bond flipped by Jho Low ever went to Najib's personal account.

Muhammad Shafee, while referring to an article from an online blog Malaysia Today, told the court that Jho Low had received money misappropriated from the issuance of bond, which were transferred into two companies related to him (Jho Low), Country Group Securities PCL and Aktis Capital Singapore Pte Ltd totaling RM74 million in 2009.

"The two companies made an easy profit when they subscribed to 1MDB bonds at a discount before reselling them at face value (or value on paper) in 2009 to Employees Provident Fund (EPF) and an insurance company, Prudential.

"We wish to establish that none of the IMTN profit went into Najib's account. The monies in Najib's account was only because of the arrangement of the Arab donation. My client was under the impression it was a donation from the Saudi Ministry of Finance.

"Najib's Ambank account (which allegedly received billions of ringgit in 1MDB funds) was opened in 2011, so it had nothing to do with IMTN," said Muhammad Shafee.

The senior lawyer then questioned the witness whether he is familiar with the term 'working in silo', which has been repeated by three 1MDB top management when they were called to the witness stand, former 1MDB chief executive officers Datuk Shahrol Azral Ibrahim Halmi and Mohd Hazem Abd Rahman as well as its chief financial officer Azmi Tahir.

The witness said 'Yes'.

Muhammad Shafee: Is it a good practice in corporate field?

Ismee: No.

Muhammad Shafee: Do you agree with me it is anathema, which is so opposite to good governance.

Ismee: Yes.

Muhammad Shafee: And that is something completely discouraged because secrecy breeds corruption, breeds fraudulent behaviour in any corporation. Working in silo, therefore, is the breeding ground for a corporation to be corrupted, to be full of fraudulent transactions such as what happened in 1MDB. Do you agree with me?

Ismee: That explains why we failed.

Najib, 68, is facing four charges of using his position to obtain bribes totalling RM2.3 billion from 1MDB funds and 21 charges of money laundering involving the same amount.

The trial before Justice Datuk Collin Lawrence Sequerah continues tomorrow.

-- BERNAMA