KUALA LUMPUR: The pensioners’ retirement fund (KWAP) approved a RM2 billion loan in 2011 to SRC International without proper documentation, the High Court heard in the corruption trial of Najib Razak.
Former KWAP vice-president Amirul Imran Ahmat said it received an application for a loan on June 3, 2011, for a working capital and general investments.
“The application letter was signed by (SRC director and chief executive officer) Nik Faisal Ariff Kamil,” said Amirul, who was then in charge of KWAP’s Fixed Income Department.
He said the loan application was also addressed to Najib Razak, then prime minister and finance minister, who agreed that KWAP approve the loan to SRC.
SRC was a wholly-owned subsidiary of 1Malaysia Development Bhd (1MDB), which was under the Finance Ministry Incorporated.
The witness also told the court that KWAP is allowed to provide loans for a profitable return to the federal or state governments, public authorities and companies which Putrajaya has an interest in.
Amirul said on June 16, 2011, he sent an e-mail to Noor Azlina Abu Bakar, an assistant to Nik Faisal, for further information like 1MDB’s audited accounts, latest available management records and company profile of SRC.
He said on June 29, 2011, Faisal replied through an e-mail that the documents would be sent as required by KWAP the following day.
However, he said Nik Faisal on July 1, 2011 sent an e-mail that he was unable to provide the information.
The e-mail read: “We are unable to disclose further information requested as the real estate projects are in the master planning stage of development.
“Disclosure of the detailed information requested is subject to approval of the chairman of the SRC Board of Advisers and prime minister for which we have sought and have not obtained clearance to disclose thus far.”
Amirul said despite this, KWAP’s Investment Panel approved a loan application to 1MDB on July 19, 2011 with the federal government becoming guarantor.
About a month later, he said KWAP received a letter from SRC (a company which is a subsidiary of 1MDB), that the RM2 billion be paid to them directly.
Amirul said he later saw a letter of guarantee dated Aug 26, 2011 which was signed by former second finance minister Ahmad Husni Hanadzlah.
The witness will continue to testify before trial judge Mohd Nazlan Mohd Ghazali on Monday.
KUALA LUMPUR, May 2 — State investment firm 1Malaysia Development Berhad (1MDB) solicited a RM3 billion federal grant directly via Datuk Seri Najib Razak to set up SRC International Sdn Bhd as a special purpose vehicle to secure energy supplies, the High Court heard told.
Former deputy director general (Macro) of the Economic Planning Unit (EPU) in the Prime Minister’s Office, Datuk Kamariah Noruddin, testified today that she had difficulty handling 1MDB’s application in August 2010 as it was “striking” for a sitting prime minister to do so.
“It was a hard application to process as I do not normally handle applications from the prime minister. They (applications) are usually applied through the respective ministries.
“The letter addressed to Najib and the Finance Ministry, was signed by then 1MDB’s managing director Datuk Shahrol Azral Ibrahim Halmi,” she said, adding that the letter was also extended to other Cabinet members.
Kamariah was the 28th witness in Najib’s SRC International money-laundering and criminal breach of trust trial over RM42 million of funds from SRC International, a former 1MDB unit.
She said she did not make any comments on the application as it was handled by the late EPU director Datuk Noriah Ahmad, who had been instructed by former minister in the Prime Minister’s Department, Tan Sri Nor Mohamed Yakcop, to also prepare a summary on the matter.
“In general, the 1MDB letter outlined the proposal to establish SRC International in order to obtain and maintain strategic importance in extraction, processing, logistic services and trading of resources,” she said on the 12th day of the trial.
Some of the resources she told the court were; coal, oil and gas, steel and aluminium and uranium.
However, she said EPU only approved RM20 million out of RM3 billion in government grant to be provided for the setting up of SRC International for the purpose of securing coal and uranium.
“The RM20 million was just to establish the company. Maybe they needed to get the talent they required and for them to do due diligence.
“EPU generally supported the proposal, but we did not support SRC International to get involved in certain sectors like oil and gas as Petronas was already established for this purpose.
“Previously, TNB (Tenaga Nasional Bhd) was responsible for bringing in coal and uranium but now it does not mind having SRC International roped in as well. However, the dependency on TNB was high at 80 per cent. This SPV was planned to ensure energy security,” she said.
She added that EPU felt certain other sectors like steel and aluminium should be left to the private sector to be managed.
Kamariah then identified a memo written by Noriah where Nor Mohamed subsequently gave the green light and RM20 million of launching grant was approved via a letter dated October 12, 2010 which was then approved by Najib on October 15, 2010.
When cross-examined by Najib’s lawyer Tan Sri Muhammad Shafee Abdullah on whether 1MDB’s proposal was a harebrained scheme or a serious proposal, Kamariah replied the latter in the affirmative.
“In my opinion, it will be serious if you submit to the prime minister, so I would consider this a serious proposal,” she replied.
She also denied that the EPU had rushed to approve 1MDB’s application.
During re-examination, Kamariah said EPU disallowed the RM3 billion government grant to set up SRC International on grounds of a three-paged proposal with the entity yet to form at the date of application on August 24, 2010.
“The amount (RM3 billion) also constitutes about seven per cent of the nation’s development allocation budget.
“We do not have the privilege to have such a huge development budget to a company which has yet to be formed. It would be negligent on the part of EPU to do so,” she said.
According to Company Commission of Malaysia records, SRC International was only founded on January 7, 2011.