Finance Minister II: SRC International another problem for Malaysia

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KUALA LUMPUR (Nov 1): Second Finance Minister Datuk Johari Abdul Ghani admitted that SRC International Sdn Bhd, a former subsidiary of state-owned investment fund 1Malaysia Development Bhd (1MDB), is one of the problems the country is facing today.

"I think SRC (International) is one of the companies (that) is facing a problem," he told the reporters after officiating Asian Strategy & Leadership Institute (ASLI)'s 21st Malaysian Capital Market Summit "Beyond Boundaries, Soaring Higher" here today.

"I have said this many times. It's a strategic investment, initially good, but turned bad, (due to) poor governance, weak management, wrong business model, that's it," said Johari.

To recap, SRC International was set up by Prime Minister Datuk Seri Najib Razak's government in early 2011 to pursue strategic overseas investments in energy resources.

Now owned by the Ministry of Finance (MoF), SRC International is under pressure to meet interest payments on its borrowings of RM4.3 billion, primarily owed to pension fund Retirement Fund Inc (KWAP).

It was reported that SRC International pays annual interest of RM164 million to KWAP. The amount will jump to RM660 million next year and RM964 million in 2018, including the principal amount.

Meanwhile, Johari said the MoF is working through "various means" to retrieve SRC International's money that was stuck in BSI Bank Ltd, which is currently being probed over alleged money laundering activities linked to 1MDB.

"Let the process of SRC trying to recover their money (happen) first, because most of the money that has been invested, they parked it under BSI Bank, which is under investigation. I was told by the management of SRC that the money in the BSI Bank was frozen, therefore they cannot take back the money," he explained.

When pressed further on the matter, Johari said, "Don't talk anymore about SRC, there is no solution."