SRC trial: Management bypassed directors when submitting reports to MoF Inc
KUALA LUMPUR, June 11 — A former SRC International Sdn Bhd director, Tan Sri Ismee Ismail told the High Court today how company performance reports had bypassed the eyes of its board of directors and were directly submitted by its management to the Minister of Finance Incorporated (MoF Inc).
Ismee, during cross-examination at Datuk Seri Najib Razak’s SRC International RM42 million trial, agreed with lawyer Harvinderjit Singh that the management had failed to keep the board informed of their company’s reporting obligations to MoF Inc.
It was established during the cross-examination, before High Court Judge Mohd Nazlan Mohd Ghazali, how SRC International, after being placed under MoF Inc since February 2012, were obligated to submit annual performance reports to the body.
Ismee had also agreed with Harvinderjit the board should have gone through the reports first, only then should they have been submitted to MoF Inc.
Harvinderjit: This means reporting the KPI (key performance indicator), annual costs and transactions?
Ismee: Yes, that’s a given.
Harvinderjit: Were any reports shown to the board?
Ismee: No.
Harvinderjit: Were the contents of the MoF Inc report discussed with the board?
Ismee: No.
Harvinderjit: Would it be correct for me to say the management never kept the board informed of reporting obligations to MoF Inc
Ismee: Yes.
Ismee, the trial’s 39th witness, today also agreed there were no standing orders instructing the directors of SRC International to treat former chief executive Nik Faisal Ariff Kamil as the direct link between them and Najib, the company’s advisor emeritus.
Having gone through documents from the Companies Commission of Malaysia (SSM), and paperwork detailing resolutions made by company shareholders and its board of directors, Ismee agreed with Harvinderjit that none had contained resolutions compelling the board to treat Nik Faisal as a direct link to the former prime minister.
Harvinderjit: You said in your witness statement that Nik Faisal was the direct link, what do you mean by this, it was not formally resolved, correct?
Ismee: That was the standard practice; yes, it was not resolved.
(While examining company duty records)
Harvinderjit: It is stated here the list of duties; it doesn’t say for Nik Faisal that, ‘you will be the link between the board and advisor’, correct?
Ismee: Yes.
Harvinderjit: So it was taken by trust whether or not Nik Faisal even had a single discussion with Najib?
Ismee: Well when you put it that way. But we also never questioned, and just took what he said, because he didn’t sound fake, he didn’t sound untrue.
He also revealed during the trial how Najib never attending a single board meeting during the during his three years served as SRC director, with most of Najib’s decisions being aurally briefed by Nik Faisal to the board of directors.
Ismee will continue to testify tomorrow at Najib’s ongoing trial involving seven charges of abuse of position, criminal breach of trust and money-laundering over RM42 million of SRC International’s funds.
During the course of the trial, witnesses have testified that Retirement Fund (Incorporated) (KWAP) gave a total of RM4 billion in loans in 2011 and 2012 to SRC International, with money allegedly flowing through other companies before being transferred into Najib’s accounts.
At the time of the first loan application, SRC International was the wholly-owned subsidiary of 1MDB which was owned by the Finance Ministry’s Minister of Finance Incorporated (MoF Inc); while SRC International was parked directly under MoF Inc by the time of the second loan application.
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