Govt gave 1MDB RM20m to form SRC instead of RM3b sought by fund, says EPU witness

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KUALA LUMPUR (May 2): The former Economic Planning Unit (EPU) deputy director-general (macro) of the Prime Minister's Department Datuk Dr Kamariah Noruddin (pictured) told the High Court here today that 1Malaysia Development Bhd (1MDB) was given a grant of RM20 million to set up a special purpose vehicle (SPV) named SRC International Sdn Bhd — a sum far smaller than the RM3 billion the scandal-ridden fund's CEO Datuk Shahrol Azral Ibrahim Halmi had requested from the government.

Kamariah, 61, who retired mandatorily last year, said the application made by Shahrol dated Aug 24, 2010, for the grant stood out to her the most.

The witness explained that normally, applications for allocations are made through the ministries, and government-linked corporations make the applications through the ministries.

"What strikes me the most (about the 1MDB application) is that it was difficult to process as it is unusual as we are required to directly respond to the prime minister," the witness said when answering questions from Deputy Public Prosecutor Mohd Ashrof Adrin Kamarul.

Kamariah said Shahrol's letter was addressed directly to then-prime minister Datuk Seri Najib Abdul Razak, and following that Tan Sri Nor Mohamed Yakcop, who was then Minister in the Prime Minister's Department as well as in charge of the EPU, was asked to look into it.

The witness said she remembered that then EPU director-general — the late Datuk Noriah Ahmad — was asked to prepare a memo about the application.

The idea, Kamariah said, was to have SRC serve as an SPV to ensure the supply of coal, uranium, petroleum and natural gas to meet Malaysia's energy needs. SRC stands for Strategic Resource Company.

"Previously, TNB (Tenaga Nasional Bhd) was responsible for bringing in coal and uranium but now it does not mind having SRC International roped in as well. However, the dependency on TNB was high at 80%. This SPV was planned to ensure energy security," she said.

The witness added that petroleum and natural gas was substantially left out as Malaysia already has Petronas and hence the proposal to set up SRC was limited to procuring coal and uranium.

Kamariah identified the memo written by Noriah where Nor Mohamed gave his blessings and in the end, an allocation of RM20 million was approved via a letter dated Oct 12, 2010 which was then approved by Najib on Oct 15, 2010.

The witness identified the documents which have been tendered as evidence in this case.

The former deputy director-general said she cannot answer how the amount of RM20 million was decided as a grant despite the demand for RM3 billion.

Kamariah also said the amount was disbursed by the Ministry of Finance and that EPU was concerned in finding the allocation.

The witness is scheduled to be cross-examined by Harvinderjit Singh this afternoon.