Najib-SRC: KWAP witness says pension fund pressured to rush SRC loan approval

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KUALA LUMPUR (May 9): Kumpulan Wang Persaraan (Diperbadankan) (KWAP) vice-president of legal and secretarial affairs Azlida Mazni Arshad told the High Court here that the first RM2 billion loan to SRC International Sdn Bhd was processed in a hurry as there were instructions to speed up its approval.

Azlida, who is the 35th prosecution witness, said “there were directions for it to be expedited” during questioning by deputy public prosecutor Datuk Ishak Mohd Yusoff.

The witness further explained that the first Special Investment Panel meeting was held on July 19.

“In the Special Investment panel meeting chaired by KWAP chairperson Tan Sri Wan Abdul Aziz Wan Abdullah, the KWAP CEO (Datuk Nor Azian Mohd Noh) informed the members that Prime Minister (Datuk Seri Najib Razak) had told Wan Abdul Aziz to expedite SRC International's first loan application and that RM2 billion was sufficient,” she said in her testimony.

Azlida further identified the minutes of the first Special Investment panel meeting dated July 19, 2011, which were marked as evidence.

The witness also said the Fixed Income Department had drafted a working paper proposing that the loan that was to be extended to SRC should come with tighter requirements which include the company obtaining either a Government guarantee, a guarantee from 1Malaysia Development Bhd (1MDB), or a letter of comfort or awareness from the Finance Ministry.

“A special condition was set [so] that SRC which has been a subsidiary of 1MDB be placed directly under Minister of Finance Inc,” the witness said.

“After the proposal was tabled, the Special Investment panel approved the RM2 billion loan but agreed that it was too big to be given to a RM2 company (SRC) as it was too risky. The panel offered a RM1 billion loan [instead],” she said, adding that it was willing to only approve the RM2 billion loan provided that it was given directly to 1MDB, which is placed under the Finance Ministry Inc, rather than SRC.

Azlida said the panel members also questioned the capability of the SRC management to invest in natural resources that needed highly-specialised employees and they also felt that the amount should not be given in a lump sum.

The witness said after listening to the investment panel members, the fund agreed to either approve the RM2 billion loan based on the Government guarantee or have the money given to the Government, which will in turn disburse it to 1MDB.

SRC wrote in to ask that the RM2 billion be given directly to company

The witness told the court that SRC sent a letter to Nor Azian on Aug 12, 2011 signed by its director Nik Faisal Ariff Kamil requesting that the RM2 billion be given directly to SRC as it is a subsidiary of 1MDB.

“As the Investment Panel meeting was a long way off from when the letter was sent by SRC and as [the then PM] said the application [must] be expedited, the Fixed Income Department prepared another proposal and an investment panel circular panel [was] distributed to the panel members for it to be voted via majority.

“I confirmed receiving the response from the six panel members and the six of them — namely Wan Abdul Aziz, Datuk Mohammad Azlan Hashim, Datuk Seri Abdul Wahid Omar, Datuk Norzirah Bahari, Cheah Tek Kuang and Che Zakiah Che Din — had given the go-ahead for the loan of RM2 billion be given directly to SRC,” the witness said.

Earlier, former assistant vice-president of KWAP’s fixed income department Amirul Imran Ahmat testified that he had to change the dates of the second working paper for the Special Investment Panel as he had to prepare it in a hurry.

The second working paper was prepared after his higher-ups — including the fund’s CEO Datuk Nor Azian Mohd Noh — ordered a review of the first working paper, which recommended only RM1 billion be loaned to SRC.

Amirul further testified that as SRC did not provide documents to support the loan, the loan should not have been given by KWAP to the 1MDB subsidiary.

Azlida further confirmed that the Government stood as a guarantor for the second loan and an agreement was signed on Aug 26, 2011 to disburse the RM2 billion loan.

She further testified that sometime in March, SRC also applied for another RM2 billion. The amount was approved by KWAP on March 27, 2012.

The letter of guarantee for SRC's second loan was signed by Najib, Azlida said. The witness was asked by Ishak to identify the former premier who was seated at the accused dock.

She also told the court that KWAP also agreed that SRC be placed directly under the Minister of Finance Inc, rather than 1MDB, as a result of this.

Azlida would be cross-examined by Najib's lawyers as the proceeding before Justice Mohd Nazlan Mohd Ghazali takes place on Tuesday (May 14).