KUALA LUMPUR — June 19, 2019: A finance ministry senior officer has confirmed that the government as of last May still owed Retirement Fund Incorporated (KWAP) RM4.15 billion for loans taken by SRC International Sdn. Bhd. due to a government guarantee to back the loan.
Based on the agreement between the two parties, the loan would be repaid within 10 years from the date of disbursement in 2012.
“The government is still servicing SRC’s debts to KWAP,” said the ministry’s strategic investment deputy secretary Afidah Azwa Abdul Aziz when reading out her witness statement at today’s hearing.
The officer who has been with the ministry since 2001 said the ministry would normally be prepared to bear the cost of projects which could not generate enough revenue particularly while under construction.
But in SRC’s case, the loans were intended for investments in which the company should be getting returns, she remarked.
“The government did not prepare any allocation for the repayments as SRC had dallied in informing that it was incapable of settling them,” she said during the examination in-chief by deputy public prosecutor Datuk Suhaimi Ibrahim in the trial of former prime minister Datuk Seri Najib Razak who is facing three counts of criminal breach of trust, one charge of power abuse and three counts of money laundering involving SRC International’s funds totalling RM42 million.
According to Afidah, the ministry had loaned RM605 million to SRC International for it to make overdue repayments to KWAP and to her knowledge, SRC International has not repaid the RM605 million.
She explained that the main factor behind the ministry’s decision to give the loan was to avoid KWAP declaring a default by SRC, as such a situation would require the government, as guarantor, to make a full payment of the RM4 billion loan.