Friday 29 Mar 2024
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KUALA LUMPUR (May 6): Former prime minister Datuk Seri Najib Razak supported the request by SRC International Sdn Bhd for a RM3.95 billion loan from Kumpulan Wang Persaraan (Diperbadankan) (KWAP) to be used for general investment "without limitations", according to a two-page request letter sighted by theedgemarkets.com.

In the private and confidential letter dated June 3, 2011, sent by Nik Faisal Ariff Kamil, who was director of SRC at the time, and addressed to KWAP, it was revealed that SRC had sought Najib's approval for funding from KWAP as follows:

  1. For working capital and general investment without limitations
  2. A clean loan of RM3.95 billion with 1MDB as the guarantor
  3. 10 years bullet paying 4.70% annually with a draw-down date of July 1, 2011 and maturity date of June 30, 2021, and
  4. For the period of the loan, SRC is to remain an effective wholly-owned subsidiary of Minister of Finance Inc.

As mentioned by KWAP Fixed Income Department former assistant vice-president Amirul Imran Ahmad, who was the 29th witness in the Najib-SRC trial, Najib had handwritten a note in the letter saying he "agrees with the proposal", which is understood to be addressed to then KWAP CEO Datuk Nor Azian Mohd Noh.

The letter titled "1Malaysia Development Bhd (1MDB) — Request for Approval for KWAP to invest RM3.95 billion in the strategic resource company, SRC International Sdn Bhd, a wholly subsidiary of the Minister of Finance Inc" was tendered by Amirul as exhibit in court last Thursday.

In the said letter, which subsequently resulted in KWAP's first RM2 billion loan to SRC, Nik Faisal had also informed Najib of the completion of set-up of SRC.

"The complete set-up has also been approved by the Minister in the Prime Minister's Department (Economic Planning Unit). SRC will operate under the advice of YAB Datuk Seri (Najib) with its chairman being Datuk Ismee Ismail," he said in the letter.

Nik Faisal also explained about SRC's role to safeguard Malaysia's interest in a global inflationary environment.

He said the world is more dependent on its resources such as gold, copper, other metals as well as coal, uranium and other energy sources, given that these are the anti-inflationary investments linked with growth and seen as a safe-haven and storage of value against the decreasing US dollar.

"While Malaysia has good natural resources base, we need to diversity globally to secure alternate resource basins for the future, especially in materials such as uranium, and others that might not be mined and/or produced in Malaysia.

"Given the fragility of global supply chains as witnessed after the Japanese tsunami this year and unpredictable geopolitical situation, stable geographical locations as resource basins can provide important strategic risk management benefits to Malaysia," Nik Faisal added.

Besides, he said Malaysia has established itself as an international Islamic financial centre over the years.

"We feel that Malaysia will be a prime location for a global Islamic commodity and energy exchange that uses Islamic financial principles and liquidity from GCC countries to fund and finance physical and derivative commodities and energy trades between resource-rich countries and the key markets of China and other emerging countries," Nik Faisal told Najib.

In the letter, Nik Faisal said the risk-sharing principles of Islamic finance and ample liquidity from GCC seeking shariah-compliant utilization and income-generation will be able to finance the commodities and energy trade between the suppliers and buyers in a fair and sustainable way.

"Malaysia can become an important and trusted gateway and guardian for this trade route and the relevant financing supporting its trades," he said.

He also stressed that Malaysia can draw in Indonesia, the world's most populous Muslim country, to use the Islamic Commodities and Energy Exchange to sell its supplies and meet its demands in various commodities.

Nik Faisal is currently missing, with news in June last year reportedly saying he had been travelling to and from Indonesia since the 1MDB scandal broke in 2015.

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