Najib's SRC Trial: Najib pushed for RM4 bil loans but uninterested in outcome

This article first appeared in The Edge Malaysia Weekly, on April 19, 2021 - April 25, 2021.
Najib's SRC Trial: Najib pushed for RM4 bil loans but uninterested in outcome
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FORMER prime minister Datuk Seri Najib Razak put in so much effort to help secure and expedite the release of loans totalling RM4 billion from Kumpulan Wang Persaraan (Diperbadankan) (KWAP) to SRC International Sdn Bhd in 2011 and 2012. But, unfathomably, he seemed uninterested in how the funds had been utilised, the Court of Appeal heard last week.

Worse, nobody appears to have any inkling of what has happened to the RM3.6 billion remaining from those loans, last believed to be held in a Swiss bank account.

Ad hoc prosecutor Datuk V Sithambaram told the three-person bench that no evidence had been brought by the defence to demonstrate that the former 1Malaysia Development Bhd (1MDB) unit had utilised the funds for its purported “national interest” purpose — to invest in projects associated with conventional and renewable energy resources, natural resources and minerals.

“SRC had nothing to show for the RM4 billion loan until the PM left office in 2018 [some six to seven years after the loans were advanced], except for the RM42 million in the appellant’s [Najib] personal bank account!” he pointed out.

In the first two days of the prosecution’s rebuttals last week, Sithambaram addressed the defence’s submission on Najib’s abuse of power charge in relation to the approval of two KWAP loans totalling RM4 billion.

SRC had received a RM2 billion loan from KWAP in August 2011. For the second RM2 billion loan, a government guarantee (GG) was approved by cabinet in February 2012, even though no application had been made by SRC.

Moreover, the money was immediately disbursed a month later. On top of that, Najib issued a letter requesting KWAP to disburse the second loan to SRC, even before the cabinet approved the GG.

Note that it has been established in court that not only did Najib not excuse himself but he also chaired both cabinet meetings that resulted in the approval of the GG for the loans. All this indicates that the then prime minister and finance minister had abused his position to ensure that the funds were disbursed quickly, Sithambaram argued.

It was highlighted that Najib’s participation in the cabinet meetings that approved the GG and thus the RM4 billion in financing to SRC directly allowed him to be in a position of access to greater funds of the company at any time and as and when he deemed necessary, including to the RM42 million that flowed into his accounts in late 2014 and early 2015.

Why the haste?

Interestingly, despite his explicit instruction to extend and expedite the loan disbursement, Najib testified last year that it was still the KWAP investment board’s decision to approve or reject the request. “I never gave a direct instruction. It was for KWAP to look into. They can say that they do not agree,” he maintained.

To this, Sithambaram argued that Najib’s actions had certainly influenced his subordinates in KWAP, including then chairman of its investment panel Tan Sri Dr Wan Abdul Aziz Wan Abdullah, as the pension fund came under the purview of the Ministry of Finance. As Wan Abdul Aziz was answerable to the then finance minister, Sithambaram asserted that was how Najib had managed to squeeze the loans out of KWAP for the benefit of SRC even though “SRC was a two-dollar company with no expertise to carry out national energy projects nor repay the loan”.

“Ultimately, KWAP was pressured by the appellant into agreeing to grant the loans. The appellant admitted in cross-examination that his request for the SRC loan from KWAP carried ‘weight’. It is this ‘weight’ that the prosecution submits translates into influence on KWAP into granting the loan to SRC,” he added.

What happened after the loans were disbursed?

The prosecution further submitted that Najib did nothing to ensure that the objective of the loan for national energy venture projects was met after the loan was disbursed. In fact, Sithambaram pointed out, the former prime minister had never received or asked for any board minutes or annual general meeting reports until he left office in 2018.

More shockingly, Najib admitted that he did not inform the cabinet when tabling the second GG that he was aware that SRC had not conducted any energy venture projects after receiving the first RM2 billion loan. By withholding such personal knowledge, Sithambaram highlighted, Najib had kept vital information away from the cabinet, thereby acting in conflict of professional interest as the then prime minister and finance minister versus his personal interest in SRC.

Upon receipt, the bulk of the RM4 billion drawn down by SRC — some RM3.6 billion — was almost immediately transferred to accounts outside the country, and now appear to have been frozen by the authorities in Switzerland. The court has been informed that no one knows the current status of the funds.

It was previously reported that the transfer of funds was made through a secret SRC account, and not via its normal account. The signatory of the secret account was former SRC managing director Nik Faisal Ariff Kamil, who is currently at large.

The appeal hearing before Justices Datuk Abdul Karim Abdul Jalil, Datuk Has Zanah Mehat and Datuk Vazeer Alam Mydin Meera will continue on Monday (April 19), with the prosecution submitting its rebuttals to the defence on the charges of criminal breach of trust and money laundering.

Involved from the start, former PM was controlling figure at SRC — prosecution

By Hafiz Yatim


The argument made by Datuk Seri Najib Razak’s defence that he played no role at SRC International Sdn Bhd and that the accomplices associated with fugitive businessman Low Taek Jho were responsible for the theft of company funds was debunked by the prosecution last week.

The former premier and finance minister had set the groundwork for control of SRC from the start and effectively controlled the entity throughout, the prosecution argued in its two-day submissions at the Court of Appeal.

Ad hoc prosecutor Datuk V Sithambaram detailed Najib’s involvement, beginning with the acquisition of a shelf company, to rushed mega loans that he had personally helped to secure, purportedly for investments in alternative energy resources for Malaysia, as well as government guarantees (GGs) for the loans and his subsequent lack of interest in recovering the RM3.6 billion in unused money that had been transferred to a Swiss bank.

For these reasons, the prosecution said, Najib’s conviction for abuse of power — in relation to his participation in the issuance of GGs for the two loans totalling RM4 billion made by Kumpulan Wang Persaraan (Diperbadankan) (KWAP) over a seven-month period, from August 2011 to March 2012 — was safe.

Sithambaram pointed out to the three-person bench that former second finance minister Datuk Ahmad Husni Hanadzlah had testified that he was asked by Najib not to meddle in the affairs of SRC and its former parent company 1Malaysia Development Bhd (1MDB), even though he was the minister in charge of companies under Minister of Finance Inc.

Other actions of Najib that supported its argument, said the prosecution, included the former premier’s eagerness to ensure bigger loans for SRC, even though the state-owned entity had no track record. For instance, it was Najib who suggested to then KWAP CEO Datuk Nor Azian Mohd Noh that a proposed initial RM1 billion loan be doubled to RM2 billion.

Also, former Cabinet secretary Datuk Maliami Hamad had testified that his division had to prepare Cabinet papers for the GGs in haste as they were linked to the then prime minister. At the Cabinet meeting, Najib did not declare his interests or leave the meeting, nor did he allow Ahmad Husni to oversee the meeting that subsequently gave the green light for the GGs, even though Ahmad Husni later signed off on the approval.

Sithambaram observed that the defence’s own witness, former Treasury secretary-general Tan Sri Mohd Irwan Serigar Abdullah, had testified that the approval of a GG normally took a month, but it was fast-tracked to just 10 days in SRC’s case. Irwan was referring to a subsequent GG provided for the second RM2 billion loan that KWAP extended to SRC.

Evidence showed that after the first RM2 billion loan from KWAP made its way to SRC, a sum of RM1.8 billion was moved out on the same day. Similarly, for the second RM2 billion loan, a similar amount was transferred to Switzerland via a secret account that the SRC board did not know existed.

Sithambaram also pointed out that SRC CEO and managing director Nik Faisal Ariff Kamil had acted as “a messenger” between Najib and the board. Moreover, the former premier kept Nik Faisal on as a director and signatory to SRC accounts even though at one point, the latter had been removed by management for financial mismanagement. Like a number of others who were involved in the case, including Jho Low, Nik Faisal is currently a fugitive from justice.

Stranglehold on SRC board

The prosecution, through former SRC chairman Tan Sri Ismee Ismail’s testimony, told the Court of Appeal that Najib’s control over the board was apparent when the company’s memorandum and articles of association were amended. Board minutes dated April 23, 2012, showed that the amendment stipulates: “The prime minister shall be appointed and hold office as advisor emeritus to the company. The advisor emeritus shall advise the board on material matters and matters of strategic interest to Malaysia and the board shall give due consideration to and implement any advice of the advisor emeritus in the best interests of the company.”

The board minutes also showed that an amendment to SRC’s memorandum and articles of association, which provided for the appointment of the prime minister as advisor emeritus to the company, gave him the power to hire and fire members of the board.

“He has a role in the company by virtue of the MAA that gives him the power as the golden shareholder,” Sithambaram told the bench led by Justice Datuk Abdul Karim Abdul Jalil, pointing out that Najib did not have to sit on the board to control it.

The defence had argued that the board should have been held accountable for the company’s actions, and not Najib, as it was the board that controlled SRC, not the shareholder.

Nothing done to recover the frozen funds

Sithambaram also presented the court transcript of Ahmad Husni’s testimony, in which he said Najib had declined his offer in 2015 to help recover SRC funds frozen by the Swiss authorities on the basis that “a plan needed to be shown (by Ahmad Husni)”.

When Sithambaram asked Najib whether he had any plans to retrieve the funds himself, the Pekan MP said he would let the SRC board decide.

“Till today, after his government’s fall in 2018, nothing has been done to bring the money back. This shows that he has personal interest in SRC’s set-up and not wanting to see the money returned,” said the prosecutor.

Sithambaram also countered the defence’s argument that the gratification should be immediate, and not after 3½ years when Najib received the disputed RM42 million in his bank accounts.

“We, the prosecution, say that as long as there is abuse of power proven, the time frame of anyone receiving gratification should not apply.”

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