This article first appeared in The Edge Malaysia Weekly on November 18, 2019 - November 24, 2019

THERE were many instances where the conduct of Datuk Seri Najib Razak led the Kuala Lumpur High Court to conclude that he had abused his power to receive gratification — one of seven charges levelled against him — in the misappropriation of RM42 million belonging to SRC International Sdn Bhd.

Ultimately, judge Mohd Nazlan Mohd Ghazali ordered the former prime minister to enter his defence on all seven charges.

On the abuse of power charge, he laid out 12 instances (see accompanying fact box) that led him to conclude that there was a prima facie case for Najib to answer.

The judge ruled that due to Najib’s position as the prime minister and finance minister, he was able to engineer the formation of SRC, which, although mooted as a strategic natural resource company, became, for all intent and purposes, an entity that was used for his own private advantage.

Beginning with Najib’s decision to give SRC a RM20 million grant to the pressure exerted on Kumpulan Wang Persaraan (Diperbadankan) or KWAP, through its former chairman Tan Sri Wan Abdul Aziz Wan Abdullah and ex-CEO Datuk Azian Mohd Noh, to approve an initial RM2 billion loan and then, a subsequent one of the same amount, and the hurried preparation of Cabinet papers for SRC to obtain a government guarantee (GG) on the loans, before they were brought to Cabinet several days later, demonstrated the extent of his influence.

This was further evident when Najib chaired Cabinet meetings, which approved the two GGs, the second one even before SRC applied for the second RM2 billion loan.

Also, telling former second finance minister Datuk Seri Ahmad Husni Hanadzlah not to interfere in SRC’s and its parent 1Malaysia Development Bhd’s affairs underlined his dominance.

“The above series of conduct and involvement, among others, on Najib’s part vis-à-vis SRC, when viewed in its totality and taken together, disclosed evidence that cannot be construed as purely being a lawful exercise of his official duty as either the prime minister, finance minister or adviser emeritus in SRC,” said Nazlan.

“This is because such conduct and involvement was beyond the ordinary and outside the usual conduct or involvement expected of a prime minister and finance minister.

“Such conduct and involvement exhibited by the accused instead serve only to demonstrate the existence of private and personal interest on the part of the accused in SRC, which interest, in my judgement, is in the nature that is envisaged under the law, falling within the ambit of Section 23 of the Malaysian Anti Corruption Commission (MACC) Act 2009.”

Najib was charged under Section 23 of the MACC Act, with using his position as the prime minister and finance minister to commit bribery involving RM42 million when he participated in or was involved in making the decision to provide government guarantees for loans from KWAP to SRC amounting to RM4 billion.

He is alleged to have committed the offence at the Prime Minister’s Office in Putrajaya between Aug 17, 2011, and Feb 8, 2012.

Najib in position of conflict

Section 23, as defined in the MACC Act, stipulates that any officer of a public body who uses his office or position for any gratification, whether for himself, his relative or associate, commits an offence.

Nazlan said Najib’s participation in the Cabinet decision-making process — even chairing the meetings where the two GGs were approved — as well as approving short-term loans from the government when SRC was unable to repay its loan to KWAP, shows that he had an interest of a nature envisioned under Section 23.

“In fact, the accused himself, as the prime minister who chaired the meetings, had tabled the Cabinet paper on the second GG at the meeting that approved it on Feb 8, 2012. There was no disclosure, let alone any attempt for him to excuse himself from the deliberations on the Cabinet papers at either of the said meetings,” the judge said.

“The said RM4 billion loans would not have been approved by the KWAP investment panel if not for the GGs. The accused knew or ought to have known of the conflict between his public duty as the prime minister and finance minister in SRC on the one hand, and his own private interests in SRC, which applied for the GGs, on the other.”

SRC not an ordinary MoF company

The court observed that SRC was not like any other companies owned by Minister of Finance Inc.

“SRC was under the control and direction of the accused from day one. Even before SRC’s incorporation, the accused had wielded power by virtue of Articles 67 and 116, which conferred on the accused, as the prime minister, the authority of appointment and removal of directors, and the authority to amend the memorandum of articles of association of the company,” said Nazlan.

“The insertion of Article 117, making the prime minister the adviser emeritus of SRC, whose advice must be sought on matters, allows him to exercise his control over SRC.”

He said the starting point in the establishment of SRC in early 2011 and Najib’s participation in Cabinet meetings in 2011 and 2012 were acts that amount to abuse of position and which were for the purpose of obtaining financial gratification, which materialised in the RM42 million received by him in late 2014 and early 2015.

He added that it can be seen that the accused had taken action on a matter that involved his interest. “However, the accused’s personal involvement and intervention in the name of either the prime minister or finance minister on SRC matters, with the assistance of (SRC CEO) Nik Faisal (Ariff Kamil), were disproportionately and glaringly evasive and imperious. That this involvement and intervention reflected the presence of the accused’s own private interest in SRC is quite manifest.”

Moreover, Nazlan stressed that from the evidence, Najib could not truly claim that his actions, which led to the GGs and the KWAP loans, “be said to have been in the best interests of KWAP or the government”.

“It is already presumed that the accused had used his position for gratification. It is for the accused to rebut the presumption,” he said.

“It is my judgement that after having conducted the maximum evaluation of all credible evidence made available, I find the elements of the offence of using his position for gratification, as defined under Section 23 (1) of the MACC Act, have all been proved by the prosecution ... such that a prima facie case in respect of the charge under Section 23 of the Act has been established.”

On Dec 3, Najib will have an opportunity to rebut the allegations made against him and set the record straight.

Instances of power abuse

l    Najib approved a RM20 million launching grant for SRC International Sdn Bhd after it requested a RM3 billion grant from the EPU.

l     Najib made a note on a June 3, 2011, letter from SRC CEO Nik Faisal Ariff Kamil addressed to him, that he agreed with SRC’s proposal to obtain a RM3.95 billion loan from KWAP and then forwarded the letter to KWAP.

l     Najib told Treasury secretary-general Tan Sri Dr Wan Abdul Aziz, who was KWAP chairman, to expedite the approval of the SRC loan and that RM2 billion was sufficient.

l     Before SRC received the first RM2 billion loan, the company wrote in to apply for a GG in a letter dated Aug 12, 2011. Cabinet papers were immediately prepared and it was not SRC that helped prepare the documents.

l     Najib attended and chaired the Aug 17, 2011, Cabinet meeting that approved the GG.

l    Ministry of Finance deputy secretary-general Datuk Mat Noor Nawi said Najib agreed that SRC ownership be transferred from 1MDB to Minister of Finance Inc.

l    The GG for SRC’s second RM2 billion loan from KWAP took place before SRC requested it. Cabinet papers were prepared on Feb 3, 2012, and a Cabinet meeting chaired by Najib approved it on Feb 8, 2012.

l    After the second GG was approved by the Cabinet, SRC wrote a letter dated March 13, 2012, seeking the additional RM2 billion loan.

l     KWAP investment panel minutes dated March 20, 2012, shows approval for SRC’s second RM2 billion loan had been approved by Najib as finance minister and that he had advised the loan be given since KWAP had financed the first facility.

l     Although KWAP initially agreed for progressive disbursements for the second RM2 billion loan, Najib, following a meeting with Wan Abdul Aziz, and the deputy head of treasury asked that a lump sum payment be made.

l    Najib executed the second GG on behalf of the government and Wan Abdul Aziz told the court that Najib had asked KWAP to release the second RM2 billion loan to SRC before the GG was given to KWAP.

l    Second finance minister Datuk Ahmad Husni Hanadzlah said Najib had asked him not to interfere in matters concerning 1MDB and SRC. When he offered to verify the status of RM1.8 billion in funds believed to be frozen in Switzerland, Najib rejected his offer.

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