KUALA LUMPUR (Dec 11): The Cabinet approval of a Government guarantee on SRC International Sdn Bhd’s first loan application to Retirement Fund Incorporated (KWAP) amounting to RM2 billion was given before the company had formally appointed its directors, it was revealed at the High Court today.
The court was told that the Cabinet had approved the Government guarantee to back the loan to SRC on Aug 17, 2011, exactly six days before the five-member SRC International board of directors met for the first time on Aug 23.
Thus, Attorney-General Tan Sri Tommy Thomas alleged that the decisions were made solely on former Prime Minister Datuk Seri Najib Razak's directives without going through any board of directors, to which the latter disagreed.
At the start of the cross-examination this morning, Thomas asked Najib to confirm a series of documents related to SRC.
These include:
- a letter of appointment for seven SRC directors dated Aug 1, 2011
- the company's memorandum and articles of association dated Jan 4, 2011, and
- letters and emails dated June and July 2011 which documented SRC's two loan applications to borrow monies from KWAP.
As the dates were confirmed and established by Najib, Thomas pointed out that the decisions to apply for loans from KWAP were made in June and July, when the members of its board of directors were only formally appointed and had their first meeting later in August that year.
Najib had personally appointed the five-man board consisting of SRC chairman Tan Sri Ismee Ismail, chief executive officer (CEO) Nik Faisal Ariff Kamil, Datuk Suboh Md Yassin, Datuk Che Abdullah @ Rashidi Che Omar and ex-1MDB Ceo Datuk Shahrol Azral Ibrahim Halmi.
The prosecution argued that it was standard practice for a board to meet before any business decisions can be made, however in this case, it was all carried out by Najib and Nik Faisal.
Thomas: Yesterday, you said that on your role in SRC [as advisor emeritus], all the steps you took were on the advice of the board of SRC. How could you have received such advice relating to these seven documents when the board of directors were non-existent?
Najib: It must've been forwarded by the CEO at that time, [1Malaysia Development Bhd former CEO Datuk Shahrol Azral Ibrahim Halmi].
Thomas: I put it to you that all these decisions were made without any board of directors and solely by you.
Najib: No, no I disagree.
Najib maintained that he merely approved decisions made by the SRC board.
Najib has previously claimed that he had no knowledge of the company's plan to apply for a RM3.95 billion loan from KWAP prior to receiving a letter about the matter from SRC's former chief executive officer and managing director Nik Faisal Ariff Kamil — who is currently missing — that was addressed to him.
KWAP's investment panel only agreed to extend a RM1 billion loan as it did not want so much funds to be concentrated or risked in a single company.
Eventually the loan became RM2 billion, and later in 2012 another RM2 billion loan was approved despite the proposals not meeting KWAP's requirements.
Najib admitted today that he had instructed Treasury officials to expedite the working paper for the Cabinet on the government guarantee.
“The Economic Planning Unit had supported the investments that were to be made by SRC, this is why the Cabinet paper had to be expedited,” he told the court.
The embattled former premier currently faces seven charges of criminal breach of trust, abuse of power and money laundering involving RM42 million from SRC.
If convicted, he is liable to a 20-year jail term and a fine of RM5 million or five times the amount of money laundered, whichever is higher.
The Edge is reporting the proceedings of the SRC trial live.