This article first appeared in The Edge Malaysia Weekly on June 24, 2019 - June 30, 2019

SRC International Sdn Bhd director Datuk Suboh Md Yassin received a call from the company’s CEO, Nik Faisal Ariff Kamil, after the 14th general election, telling him to leave the country to avoid being hauled in to help in an investigation by the Malaysian Anti-Corruption Commission (MACC).

Suboh, 68, looked frail when testifying at the High Court last week in the trial of former prime minister Datuk Seri Najib Razak over the misappropriation of RM42 million belonging to SRC.

He said when the MACC began its probe into SRC and its former parent company, 1Malaysia Development Bhd (1MDB), in 2015, he had wanted to assist and had contacted the agency.

“Before I could go [to the MACC], I received a call from someone whom I did not know, claiming to be from the MACC. The person told me not to go to the anti-graft commission but to leave Malaysia,” he said.

“I felt scared at the time as Datuk Seri Najib Razak was still in power as the prime minister. I wondered what would happen to me and my family. I decided to run away with my wife to Bangkok, Thailand, where we stayed for about a month at my own expense.”

The prosecution’s 42nd witness said in Bangkok, a Thai handed him a flight ticket to Abu Dhabi, the United Arab Emirates, where he stayed a week with his wife.

“I don’t know who paid for my flight and accommodation. Following that, I took a flight to Bangkok, and when I returned to Malaysia, I received a call from Nik Faisal directing me to run away again to avoid being hauled in to help in investigations by the authorities. I made the decision to remain in Malaysia to assist in the investigations,” he said.

Previously, it was reported that Suboh and Nik Faisal had been out of the country when the authorities sought their assistance in the probe. Suboh was reported to have returned to Malaysia in June last year after three years on the run.

At one point, it was reported that the MACC went to Indonesia to record Suboh’s and Nik Faisal’s statement. Nik Faisal is still on the run.

In the intervening years, Suboh suffered a stroke and he now walks with the aid of a walking stick. In 2012, he also underwent a heart bypass surgery.

Suboh reiterated that Najib ran SRC through Nik Kamil

Suboh maintained that although he was a director of SRC, he could not make any decision or order any action to be taken on issues that cropped up as Nik Faisal would state that he would discuss the matter with Najib.

As with former SRC chairman Tan Sri Ismee Ismail’s earlier testimony, Suboh said Nik Faisal was Najib’s “link” to the board of directors.

“I knew that Najib, as the PM [then], had appointed me as an SRC director, and with that, he had the power to sack me. I realised that Najib had the absolute power to hire and fire any director,” he said.

“Although there were SRC actions which I felt were inappropriate, I did not resign from my post as a director of the company as I felt responsible for SRC’s funds, which had been invested overseas. Thus, I remained as a director and tried to ensure that the money was brought back.”

From Ismee’s testimonies, it was revealed that of the first RM2 billion loan from Kumpulan Wang Persaraan (Diperbadankan) (KWAP), RM1.8 billion was transferred overseas — RM1.5 billion to a Swiss bank and RM300 million to a Hong Kong bank.

Ismee said the board had travelled to Switzerland in 2013 to check on the money and was satisfied when informed by a bank officer that it was there.

Another witness, Afidah Azwa Abdul Aziz, from the Ministry of Finance, earlier told the court that in 2015, the Swiss bank had frozen the account, nearly triggering a default on the KWAP loan.

‘Najib did not declare interest in SRC when chairing Cabinet meetings’

A witness at Datuk Seri Najib Razak’s SRC International trial told the Kuala Lumpur High Court last week that the former prime minister did not declare his interest in the company when chairing Cabinet meetings on the provision of government guarantees for two loans of RM2 billion each from Kumpulan Wang Persaraan (Diperbadankan) (KWAP) for the firm.

Former Cabinet deputy chief secretary Tan Sri Mazidah Abdul Majid told deputy public prosecutor Muhammad Izzat Fauzan that for the first government guarantee, the Cabinet sat on Aug 17, 2011, and for the second, on Feb 8, 2012.

Mazidah, 70, said it was recorded in the minutes of the meetings that Najib had chaired both meetings.

“Based on the minutes of the two meetings, Najib did not declare his interest regarding SRC. There was also no one from the Cabinet who asked the PM to leave the meetings before the two memorandums on SRC were tabled,” she said, adding they were subsequently approved. This was verified in the subsequent Cabinet meeting.

Her testimony provided an insight into how Cabinet meetings were run when they involved key decisions.

Previously, it was reported that Najib, who was adviser for 1Malaysia Development Bhd (1MDB), had appointed the board of directors of SRC on Aug 1, 2011.

He appointed Tan Sri Ismee Ismail the chairman and made Datuk Suboh Md Yassin, former 1MDB CEO Datuk Shahrol Azral Ibrahim Halmi and Datuk Che Abdullah @ Rashidi Che Omar, directors of SRC.

Mazidah agreed that Najib, who was also the finance minister then, should have declared his interest during the Cabinet meetings if he received payments from SRC, a subsidiary of Minister of Finance Inc.

Questioned by appointed prosecutor Datuk V Sithambaram, the witness said there were no deliberations when the SRC matter was brought up during the Cabinet meetings as it would have been reflected in the Cabinet minutes if any issue had been raised.

Should a minister have an interest in matters that are to be discussed at Cabinet meetings, he or she will have to declare his or her interest and leave the meetings when the memorandum is tabled and discussed.

This practice is to ensure that the person who has an interest will not exert his or her influence or be seen to have a conflict of interest.

Mazidah also testified that she did not know that Najib was adviser emeritus to SRC and that she only learnt of it recently.

However, she agreed with lead defence counsel Tan Sri Muhammad Shafee Abdullah that Najib might not have left the meetings because there might not have been anyone to brief the ministers if questions had been raised about SRC as the demarcation between the finance minister and finance minister II was not clear.

Mazidah cited two previous occasions when former youth and sports minister Khairy Jamaluddin Abu Bakar and former defence minister Datuk Seri Hishammuddin Hussein had left meetings after declaring their interests.

The revelation is important as Najib is facing seven criminal charges — one count of abuse of power and six counts of criminal breach of trust and money laundering — involving RM42 million of SRC funds.

Another witness, Afidah Azwa Abdul Aziz, who is the finance ministry’s principal assistant secretary for the loan management, capital market and actuary division, said that based on Cabinet minutes that were disclosed in 2015, the meetings chaired by Najib approved a federal government loan of RM92 million to SRC in order to prevent an “event of default” on RM4 billion worth of KWAP loans to SRC for which the government was guarantor by virtue of its letters of guarantee.

As at Sept 28, 2015, SRC had outstanding payments of RM100.8 million with KWAP for the two loans it took and KWAP had sent letters demanding the company make the payment or risk triggering a default.

Afidah said SRC was also given two other government loans of RM250 million and RM300 million in 2016 and 2017 respectively.

RM595m owed to government

SRC International Sdn Bhd owes the government RM595 million from three credit extensions granted to the company to repay its financial commitments to Kumpulan Wang Persaraan (Diperbadankan) (KWAP) on loans amounting to RM4 billion, the High Court in the SRC trial of former prime minister Datuk Seri Najib Razak heard last week.

In fact, the three short-term loans approved by the finance ministry to SRC — ostensibly to avoid triggering a default on the KWAP loans guaranteed by the government — were paid directly from the ministry to KWAP.

But despite the three credit extensions between 2015 and 2017, SRC still owed KWAP RM4.15 billion as at May, comprising principal plus outstanding interest on two government-guaranteed loans of RM2 billion each issued to the Minister of Finance Inc from 2011 to 2012.

This was confirmed by 44-year-old Afidah Azwa Abdul Aziz, finance ministry’s principal assistant secretary for the loan management, capital market and actuary division, who was responsible for processing the government guarantees for the two KWAP loans.

The 41st prosecution witness in Najib’s SRC trial explained to High Court judge Mohd Nazlan Mohd Ghazali that SRC had three incidents of outstanding debt repayments to KWAP from 2015 to 2017, and had made loan requests totalling RM642 million.

SRC had requested a RM92 million short-term loan in 2015, a RM250 million standby credit in 2016 from which it drew down RM213 million, and another RM300 million standby credit in 2017 from which it used around RM290 million.

Afidah said, to her knowledge, SRC did not repay the MoF the three federal government loans.

“All three loans approved by MoF to SRC were paid directly from MoF to KWAP. Apart from said payments by MoF, I am not sure whether SRC was successful in repaying KWAP,” Afidah said in her written witness statement on June 19.

It is understood that SRC could have triggered an event of default (EOD) if it had not fulfilled its financial obligations to KWAP between 2015 and 2017.

If SRC had triggered an EOD, the government would have been required by law to satisfy the whole RM4 billion plus interest within 30 working days as the loans were government-guaranteed.

SRC initially borrowed RM4 billion from KWAP for strategic investments in natural resources, such as coal, aluminium, steel and uranium, as well as for working capital. It is unclear whether SRC has serviced its debt since December 2017, when it received the last tranche of government credit to service the KWAP loan.

‘It is PM’s company’

KWAP was not the only entity that bent backwards to help SRC International get its RM4 billion loan, then unprecedented in size as well as the way it was expedited and issued, as the first RM2 billion loan was issued based only on a goverment letter of comfort.

The Finance Ministry also went out of its way to help SRC as ministry officers were instructed to prepare papers for the Cabinet in support of SRC’s request for a government guarantee for its initial RM2 billion KWAP loan.

This was unprecedented as the ministry would usually take a number of weeks to prepare loan guarantee papers because it would have to check the company’s background, Afidah Azwa Abdul Aziz, who is finance ministry’s principal assistant secretary for the loan management, capital market and actuary division, responsible for processing the government guarantees for the two KWAP loans, revealed at the SRC trial.

Uncomfortable over instructions by her immediate superior Maliami Hamad on Aug 15, 2011, to prepare and expedite the Cabinet papers despite not having adequate documents from SRC, she said she expressed unease over how the papers were being prepared but her complaints “fell on deaf ears”.

Did she enquire of Maliami the reason for the urgency? Deputy public prosecutor Datuk Suhaimi Ibrahim asked during her re-examination.

“Yes, he said it is a directive from the top,” Afidah replied.

Suhaimi: “Did you ask for further explanation?”

Afidah: “Yes. I was told this [SRC] is PM's company (ini adalah syarikat PM).”

Her statement was opposed by defence lawyer Datuk Yusof Zainal Abiden, who said it was based on hearsay, and that the question should be posed to Maliami instead.

High Court judge Mohd Nazlan Mohd Ghazali allowed the statement to be admitted as evidence on grounds that Suhaimi’s question arose from Afidah’s answer during cross-examination. Moreover, Maliami will also be called as a witness.

Earlier, during cross-examination by lead defence counsel Tan Sri Muhammad Shafee Abdullah, Afidah said she had drafted the papers to the Cabinet based on oral statements from SRC representatives, comprising ex-SRC CEO Nik Faisal Ariff Kamil, Zahid Taib and two other individuals.

However, the common practice when preparing government guarantees is for a company to provide background information about itself and its proposed projects, as well as past financial performance and cash-flow records, and the finance ministry would then conduct its own investigations.

Afidah said when she questioned the information provided by Nik Faisal and Zahid at the meeting, Zahid’s reply was: "We would only answer to the PM."

At its inception in January 2011, SRC was a unit of 1Malaysia Development Bhd (1MDB), overseen by Tan Sri Nor Mohamed Yakcop, who was then minister in the Prime Minister’s Department responsible for the Economic Planning Unit.

SRC obtained its first government-guaranteed RM2 billion loan from KWAP in August 2011.

Six month later, shares of SRC were transferred from 1MDB to MoF Inc, and the company was taken away from EPU supervision and put directly under Najib, who was then prime minister, finance minister, officer in charge of MoF Inc, and SRC advisor emeritus.

The share transfer document was signed by Nik Faisal on Feb 14, 2012, slightly over a month before SRC acquired its second government guarantee for the RM2 billion KWAP loan.

Can the case end in the next 28 days?

The trial of former prime minister Datuk Seri Najib Razak, slapped with 25 counts of corruption involving RM2.28 billion of 1Malaysia Development Bhd’s (1MDB) funds, could be postponed again — for the third time — as his ongoing SRC court case is taking “longer than expected”.

“We have called 40 witnesses. There are 25 more ... there is no way the SRC [trial] can conclude on Aug 15,” Attorney-General Tommy Thomas said when requesting High Court judge Collin Lawrence Sequerah to forgo the 1MDB trial dates in August and September to make way for the SRC trial.

“It is a matter of principle where the second case (1MDB) shouldn’t start until the first (SRC) is completed.”

On May 14, Sequerah agreed to a second postponement of the 1MDB trial to Aug 19. But at the case management last Friday, Thomas informed Sequerah that “the prosecution [in the SRC trial] is going slower than expected”.

This raises the question of whether the SRC case, where Najib is facing seven criminal charges in relation to the misappropriation of RM42 million belonging to SRC International Sdn Bhd — a former unit of 1MDB — can be concluded within the 28 remaining trial dates (ending Aug 15) as 25 other prosecution witnesses have yet to testify.

Sequerah remarked that the prosecution could not assume the future progress of the SRC trial. He then set the case management date for the 1MDB trial on July 15 to have a clearer direction.

The 25 witnesses lined up include:

•     AmBank relationship manager Joanna Yu, who facilitated communications between AmBank and former SRC CEO Nik Faisal Ariff Kamil during the transfer of funds from SRC’s bank account and Najib’s accounts;

•     Former SRC director Datuk Che Abdullah @ Rashidi Che Omar — the third SRC official set to take the witness stand. He took over the SRC chairmanship from Tan Sri Ismee Ismail at end-2014 and was likely the chairman when SRC drew down RM595 million from three federal government loans between 2015 and 2017;

•     Former minister of finance II Datuk Seri Ahmad Husni Mohamad Hanadzlah, who signed the federal government’s letter of guarantee to SRC for the first RM2 billion loan from Kumpulan Wang Persaraan (Diperbadankan) on Aug 26, 2011; and

•     Former finance ministry loan management, financial market and actuary division chief secretary Maliami Hamad, who instructed his then assistant, Afidah Azwa Abdul Aziz, to speed up the processing of the first RM2 billion government guarantee at the ministry level.

Summary of witness statements

39 Tan Sri Ismee Ismail, 54

SRC’s board of directors had to comply with Najib’s instructions or go home, revealed its former chairman Tan Sri Ismee Ismail in court last week.

Ismee, the 39th prosecution witness, testified that the board members faced the axe if they refused to follow Najib’s instructions. He said they were not allowed to consider and implement financial decisions or investments independently of Najib.

The first witness from SRC to testify, Ismee took the stand for seven days, the longest time among the witnesses so far.

He agreed that all “advice” by Najib regarding SRC needed to be implemented “if it was not illegal”.

The former CEO of Lembaga Tabung Haji also testified that Malaysian Anti-Corruption Commission (MACC) officers had not exerted any pressure or attempted to force him to implicate Najib in corruption, and that they had not treated him harshly or coerced him during investigations.
 

40 Tan Sri Mazidah Abdul Majid, 70

The former Cabinet deputy secretary-general informed the court that Najib put forth a memorandum during a Cabinet meeting on Nov 5, 2015, to ask for a RM100 million loan from the federal government to SRC to cover the interest and late payment penalty on loans amounting to RM4 billion from Kumpulan Wang Persaraan (Diperbadankan) (KWAP).

Mazidah testified that the loan was proposed to keep SRC from defaulting on loans owed to KWAP as this would have dragged in the government as the guarantor, impacting its fiscal position and the planning of the national budget.

The retiree also testified that if a minister had an interest in matters to be brought up in the Cabinet memorandum, he would have to declare his interest and leave the meeting when the memorandum is tabled.

If Najib had received money from SRC, he would be required to declare his interest in Cabinet meetings discussing the company, she said.

However, she said she had not known that Najib held the role of advisor in SRC.

The witness had served as Cabinet secretary for a long time — from Tun Dr Mahathir Mohamad’s first tenure as prime minister in the 1990s to Tun Abdullah Ahmad Badawi’s premiership from 2004 to April 2009, and the Najib administration from 2009 to May 9, 2018, before serving again under Dr Mahathir from May 10, 2018, onwards.
 

41 Afidah Azwa Abdul Aziz, 44

The finance ministry’s principal assistant secretary for the loan management, capital market and actuary division told the High Court that she was asked to expedite the preparation of a memorandum related to the granting of the first government guarantee on SRC’s first RM2 billion loan as it was the “prime minister’s company”.

She made the startling revelation on the 29th day of the trial.

Afidah testified that she was told by her superior — the ministry’s secretary Maliami Hamad — to prepare the Cabinet memorandum for SRC on Aug 15, 2011, so that it could be tabled before the Cabinet two days later on Aug 17. The government guarantee was given on Aug 26.

Afidah said when she confronted Maliami on the urgency, he told her that it was the PM’s company. “I asked my superior (Maliami) why it had to be prepared hurriedly and he replied that it was ‘arahan dari pihak atasan’ (directive from the top).”

Afidah also pointed out that this was the first time the ministry had to prepare materials on a company to be included in a Cabinet memorandum relating to its application for a government guarantee. These materials are usually prepared by the company itself and submitted to the ministry for the preparation of Cabinet meeting papers.
 

42 Datuk Suboh Md Yassin, 68

The former director of SRC revealed how he feared for his and his family’s life at the height of the 1MDB scandal in 2015. Suboh, who looked frail and walked with the aid of a walking stick, had surrendered to the government in June last year after three years on the run.

He said he was directed to run away after receiving a phone call from an anonymous person who introduced himself as a MACC representative, and when he returned to Malaysia, he was contacted by Nik Faisal who ordered him to run away again to avoid the investigations.

Suboh, however, chose to remain and is expected to be a key witness as he was one of the people responsible for signing the cheques and transferring the funds from SRC.
 

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