KUALA LUMPUR — May 9, 2019: An officer from the Retirement Fund Incorporated (KWAP) has testified that former prime minister Datuk Seri Najib Razak asked the agency to expedite approval for a RM2 billion loan to SRC International Sdn. Bhd. in 2011.
Vice-president of KWAP’s legal and secretarial department, Azlida Mazni Arshad, said she was informed of the loan approval at a special meeting chaired by KWAP chairman Tan Sri Wan Abdul Aziz Wan Abdullah on July 19, 2011.
The approval needed to be expedited as it was based on an earlier meeting that approved it with an order for it to be immediate.
“I confirm that chief executive officer Datuk Azian Mohd. Noh did say during the meeting that the prime minister had asked the chairman to expedite the loan approval and that the amount was sufficient.
“During the meeting, the KWAP fixed income department had submitted a proposal in which the terms and conditions for SRC were made more stringent,” she said.
Among the conditions were that SRC must get a Malaysian government guarantee, a corporate guarantee from 1Malaysia Development Berhad and to submit a letter of comfort/awareness from the Finance Ministry.
A special condition was also set to ensure that there would be no change in SRC’s structure and that the company would be placed directly under the Minister of Finance Incorporated.
After studying the proposal, the special investment panel was of the view that the loan was too large for a company that only had a paid up capital of RM2. According to the witness, the panel agreed to approve only RM1 billion as stated in the original working paper.
She said the panel agreed to consider if the loan was channelled directly to 1MDB because 1MDB’s financial management, discipline and governance was monitored by MFI, aside from the risks in SRC’s investments particularly repayment, over-concentration, national industry as well as the ability of SRC’s management in natural resources which required high expertise.
The panel was also of the view that the loan should not be dispensed in lump sum.
However, Azlida recalled that the meeting agreed to approve RM2 billion to 1MDB after taking into consideration the views of the six panel members, including chairman Datuk Mohammed Azlan Hashim and Datuk Seri Abdul Wahid Omar, a former minister at the PM’s Department.
Azlida said KWAP approved the loan to affirm its support for the government’s strategic initiatives but on condition that its guarantee was to 1MDB. Based on the government guarantee, KWAP gave the loan directly to the government, which as the borrower gave it to 1MDB. KWAP also approved SRC’s application to shift its ownership from 1MDB to MFI.
Najib faces three counts of CBT, one charge of power abuse and three money laundering relating to SRC International involving RM42 million.
The trial before Justice Mohd. Nazlan Mohd. Ghazali resumes on Tuesday. — Bernama