KUALA LUMPUR: The High Court here today heard that former prime minister Datuk Seri Najib Abdul Razak had asked Retirement Fund Incorporated (KWAP) to expedite approval for the RM2 billion loan to SRC International Sdn Bhd.
KWAP’s Legal and Secretarial Department vice president Azlida Mazni Arshad, 47, said an unscheduled Special Investment Panel meeting No 1/2011 was held on July 19, 2011 to discuss a proposal prepared by the KWAP’s Fixed Income Department.
“I suspected it to be a proposal for KWAP’s Investment Panel to consider approving a RM2 billion loan to SRC for working capital and general investments,“ she said on the 16th day of Najib’s trial .
The 35th prosecution witness 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.
Asked during examination-in-chief by deputy public prosecutor Datuk Ishak Mohd Yusoff as to why the loan needed to be expedited, she said it was based on an earlier meeting that approved it with an order for it to be immediate.
“I confirm that KWAP chief executive officer (CEO) Datuk Azian Mohd Noh did say during the meeting that the prime minister had asked the KWAP chairman to expedite the loan approval process 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.
“Among the conditions were that SRC must get a Malaysian Government guarantee, a corporate guarantee from 1Malaysia Development Berhad (1MDB) and to submit a ‘letter of comfort/awareness’ from the Malaysian Finance Ministry,“ she said.
She said a special condition was also set to make sure that there would be no change in SRC’s structure and that the company would be placed directly under the Minister of Finance Incorporated (MKD).
After studying the proposal, the special investment panel were of the view that the loan of RM2 billion was too large for a company that only had a paid up capital of RM2, she said.
According to the witness, the panel agreed to approve only RM1 billion as stated in the original working paper proposed during an Investment Panel meeting on July 5, 2011.
She said the panel members agreed to consider if the loan was channelled directly to 1MDB which is owned by MKD, rather than to SRC.
“This was because 1MDB’s financial management, discipline and governance was monitored by MKD, aside from the risks in SRC’s investments particularly repayment, overconcentration, national industry as well as the ability of SRC’s management in the investment of natural resources which required high expertise.
“Panel members also were of the view that the loan should not be dispensed in lump sum but via progress payments,“ she said.
However, the witness said, the meeting agreed to approve the loan of RM2 billion on Aug 23, 2011 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 Economic Planning Unit, Prime Minister’s Department.
Azlida Mazni said KWAP approved the loan to affirm its support for the government’s Strategic Initiatives but on condition that its guarantee was to 1MDB and based on the Government Guarantee, KWAP gave the loan directly to the Malaysian Government which as the borrower gave it to 1MDB.
She said KWAP also approved SRC’s application to shift its ownership from 1MDB to MKD on Feb 15, 2012.
Najib, 66, faces three counts of CBT, one charge of power abuse and three money laundering charges related to SRC International Sdn Bhd funds involving RM42 million.
The trial before justice Mohd Nazlan Mohd Ghazali resumes on Tuesday. — Bernama