SRC appeal: Prosecution says clear proof of abuse as Najib sat in Cabinet meetings approving RM4b loan guarantees

PUTRAJAYA, April 14 — Datuk Seri Najib Razak’s role in the Cabinet meetings to approve two government guarantees (GGs) for loans worth RM4 billion sought by SRC International Sdn Bhd was evidence he abused his position for the firm in which he had shown personal interest, the Court of Appeal heard today.

Ad hoc prosecutor Datuk V Sithambaram said this during prosecution’s rebuttal in Najib’s appeal hearing against the former prime minister’s conviction and jail sentence for misappropriation of RM42 million SRC International funds.

He argued that the completeness of the offence under Section 23 of the Malaysian Anti-Corruption Commission Act, for which Najib was convicted, did not depend on the receipt of a gratification but the use of said position to obtain gratification.

In Najib’s case, it was his participation as then prime minister and finance minister in the Cabinet meetings held on August 17, 2011 and February 8, 2012 to approve the GGs for the Retirement Fund Incorporated (KWAP), he said.

“The offence is complete the minute the appellant sits in the Cabinet with an interest.

“The presence and involvement of the appellant during those meetings had precipitated the approval of both the GGs.

“His presence there led to the decision being made by the Cabinet to ultimately grant the two GGs for the RM4 billion loans, without which KWAP would never have granted the loans to SRC International,” he told the appeal hearing today.

Sithambaram further cited the evidence of former deputy chief secretary to the government Tan Sri Mazidah Abdul Majid, who is also the 40th prosecution witness (PW40), that also showed that the appellant neither declared his interest in SRC International when the Cabinet approved the two GGs separately nor withdrew himself from said deliberations in favour of the KWAP loans to SRC international.

“By being present at the Cabinet meetings, the other members of the Cabinet could not independently deliberate on the GGs as the appellant was their superior and was presiding over the meeting,” he added.

Sithambaram consequently argued that the appellant took a conscious decision not to declare his interest, to not leave the Cabinet meetings, to partake in the deliberations of the GGs and thereby make decisions and take actions for the benefit of SRC International.

SRC International’s Memorandum and Articles of Association accorded Najib absolute power and control

Sithambaram also pointed out that the existence of Articles 67 and 116 in the Memorandum & Article of Association (M&A) of SRC International provided Najib with the final authority on the appointment and removal of directors as well as any amendment to the M&A.

This in turn, had allowed Najib free reign to control SRC International who was at the material time appointed the company’s Advisor Emeritus.

“There is no check-and-balance, it is illusory,” he added.

He said evidence from a Directors’ Circular Resolution (DCR) issued by the company’s Board of Director states that the company was instructed to seek an additional RM2 billion loan from KWAP on the instructions of Najib in February 2012.

“This is pertinent as by the date of the shareholder minute, SRC International was already fully owned by the Ministry of Finance Incorporated (MOF Inc) and the appellant, being the finance minister, was in full control of SRC International.

“The members of the KWAP Investment Panel were acting on information that the finance minister had approved the additional RM2 billion loan to SRC International and that it was to be procured from KWAP.

“This was a clear decision made by the appellant which certainly influenced the KWAP Investment Panel to grant the additional loan to SRC International.

“Could KWAP reject the loan approved by the appellant who was both prime minister and finance minister? The answer is a resounding ‘No!’”, he said.

Earlier, Sithambaram told the court how SRC International was established with Najib’s support when state investment firm 1Malaysia Development Berhad (1MDB) had solicited a RM3 billion federal grant directly via Najib to set up the company as a special purpose vehicle to secure energy supplies in August 2010.

He said evidence revealed that a three-page letter was addressed to Najib and the Finance Ministry, which was signed by then 1MDB’s managing director Datuk Shahrol Azral Ibrahim Halmi.

Najib then made an acknowledgement note on the said letter and gave his approval for the proposal to be carried by the Economic Planning Unit (EPU) under the Prime Minister’s Department.

The EPU, when rejecting the formation of SRC International, said the company should finance its investments by obtaining its loan from a commercial bank instead.

However, Sithambaram said the reverse occurred when SRC International applied for a loan from KWAP through Najib’s intervention that was motivated by his private interest.

“It was all important that SRC entered into a fair competition with other government-linked companies and the private sector without special privileges to it.

“SRC was thus given special privilege due to the appellant’s intervention to secure the KWAP’s loan to SRC International backed by GGs,” he said.

In the RM42 million SRC International case, Najib was sentenced to 10 years’ jail on each of the three counts of CBT and each of the three counts of money laundering, and 12 years’ jail and a RM210 million fine, in default five years’ jail, in the case of abuse of position on July 28 last year.

However, Najib will only serve 12 years in jail as the judge ordered all the jail sentences to run concurrently.

The appeal hearing before Court of Appeal judge Datuk Abdul Karim Abdul Jalil who chaired a three-member panel alongside Datuk Has Zanah Mehat and Datuk Vazeer Alam Mydin Meera continues.

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