Najib's SRC Trial: KWAP loan to SRC unprecedented in size and procedure, court told

This article first appeared in The Edge Malaysia Weekly, on June 3, 2019 - June 09, 2019.

Clockwise from the top: Najib, Attorney-General Tommy Thomas, High Court judge Mohd Nazlan Mohd Ghazali and Muhammad Shafee

Sources: Prosecution witness, Uma Devi who is the branch manager of Ambank, Jalan Raja Chulan

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A loan of the magnitude of RM3.95 billion by Kumpulan Wang Persaraan (Diperbadankan) (KWAP) was unprecedented in size, the Kuala Lumpur High Court was told last week in the trial of former prime minister Datuk Seri Najib Razak in connection with the misappropriation of funds belonging to SRC International Sdn Bhd.

Similarly, it was unprecedented for the loan to be disbursed even before a letter of guarantee had been issued by the government, said Datuk Azian Mohd Noh, who was the then KWAP CEO. The loan was issued instead on the basis of a letter of comfort from the government.

Also unusual was Azian’s after-hours meeting with Najib’s principal private secretary, Datuk Seri Azlin Alias, at a hotel to receive a “loan application”, which she agreed was in the wrong format, given that it was only a letter, signed by SRC director Nik Faisal Ariff Kamil, dated June 3, 2011, to Najib, seeking the loan of RM3.95 billion.

While agreeing that the application did not meet the requirements of KWAP’s investment policy, or that the fund’s investment panel was not obliged or required to approve the loan despite its endorsement by Najib, the investment panel, nonetheless, chose to do so, disbursing the amount in two tranches.

Azian pointed out that Najib had made a note dated June 5, 2011, on the letter supporting SRC’s loan, instructing KWAP to consider the loan.

“When Najib, as PM, says he is agreeable to the proposal, it means that he is agreeable to KWAP giving out the loan to SRC,” said the prosecution’s 38th witness.

Earlier, the 37th prosecution witness, Datuk Dr Shamsul Anwar Sulaiman, raised eyebrows when he told the court that Najib had been “shocked and upset” on learning that a total of RM42 million had been transferred from Ihsan Perdana Sdn Bhd’s (IPSB) Affin Bank accounts to his private accounts at AmBank.

IPSB — formerly a shell company called Gem Horizon Sdn Bhd — was set up to undertake corporate social responsibility (CSR) programmes for 1Malaysia Development Bhd (1MDB) and its then subsidiary, SRC, Shamsul had previously testified.

He had also testified that he was asked by Yayasan Rakyat 1Malaysia (YR1M) CEO Ung Su Ling and project director Dennis See to transfer sums of RM27 million and RM5 million on Dec 26, 2014, and another RM10 million on Feb 10, 2015, to two AmBank accounts bearing numbers 2112022011-880 and 2112022011-906, which were recorded as “funds for CSR programmes”.

Additionally, he had been informed by See that IPSB would act as a “transit” stop for the RM42 million. He testified that had he known that the accounts belonged to Najib, he would not have allowed the transfers.

Shamsul, currently the Sungai Siput Umno Youth division chief, testified last week that on May 29, 2015, after his release from remand by the Malaysian Anti-Corruption Commission (MACC), which was probing the alleged illegal transfers of funds from 1MDB and SRC, he went to Najib’s Jalan Langgak Duta residence to update Najib on his arrest.

During the meeting, he said the former premier had been “genuinely shocked and upset” on learning that RM42 million had been channelled into his private accounts in AmBank.

“He was shocked that someone had put money into his accounts. He did not even know who [transferred] the money and why it was done through me (via IPSB’s account).

“He was very upset, and I apologised to him. The last company that transferred the money was mine. If only I had known the source of the funds,” Shamsul said when cross-examined by Najib’s lead counsel, Tan Sri Muhammad Shafee Abdullah.

But notwithstanding Najib’s shock at the millions of ringgit transferred to his two accounts, he did not ask Shamsul to file a report with the police or MACC, he said during re-examination by deputy public prosecutor Datuk Ishak Mohd Yusoff.

Shamsul, who admitted that he was close to Najib, whom he would meet four or five times a year and contact frequently through the phone or WhatsApp, told the court that based on Najib’s behaviour, he had concluded that the latter was genuine in his reaction.

The witness also testified that he did not believe Najib had done inappropriate things while in office as the CSR programmes were Najib’s idea, and that he had genuinely wanted to help alleviate the misery of the rakyat.

He further said he believed Ung and See might have followed instructions from the late Datuk Seri Azlin Alias, who was Najib’s principal private secretary at the time.

He added that he only found out that a total of RM42 million came from SRC’s accounts when The Wall Street Journal published the 1MDB money trail documents in July 2015, when he was in Belgium.

He called Nik Faisal after he returned to Malaysia to ask why he was not told of the source of the RM42 million.

Shamsul said while Nik Faisal confirmed that the money was indeed from SRC — it had been transferred by SRC through its subsidiary, Gandingan Mentari Sdn Bhd, to IPSB — he was not given any further explanation on the matter.


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