In SRC’s US$1.1b suit against Najib, former director said board took ex-PM’s orders at face value

KUALA LUMPUR, June 5 — A former director of SRC International Sdn Bhd said today its board had executed shareholder orders “in good faith” and without suspicion, as these were construed as the federal government’s intent to invest for national interest.

Tan Sri Ismee Ismail was testifying as a third party in SRC International’s US$1.18 billion (RM5.58 billion) civil suit against former prime minister Datuk Seri Najib Razak at the Commercial High Court.

In his witness statement, Ismee said SRC International was specifically established as a “special purpose vehicle” to execute and realise investment activities for the federal government, in particular the Finance Ministry at the time.

Najib, who was also the finance minister at the time, was SRC International’s sole and exclusive shareholder by way of Minister of Finance (Incorporated).

He was also SRC International’s adviser emeritus whose authority cannot be challenged by the board of directors in the company’s administrative structure as stipulated by the company’s Memorandum and Articles of Association (M&A).

Ismee consequently said Najib’s claim of lacking any authority to decide or involve himself on behalf of SRC International is absolutely untrue and inaccurate based on what had transpired.

“Firstly, I have never once suggested any form of investments using funds from the Retirement Fund Incorporated (KWAP) — a statutory body which manages the pension scheme for Malaysia’s civil servants.

“Secondly, I was not involved in the suggestion for the plaintiff (SRC International) to undertake overseas investment using the monies from KWAP by transferring them to SRC BVI,” his said.

Evidence before the court showed that US$1.18 billion was transferred out of SRC International (Malaysia) Limited’s (SRC BVI) into various intermediaries between December 2011 and April 2014.

However, none of the US$1.18 billion transferred out appeared to have been used to ensure the long-term supply of energy and natural resources for which the company was established.

Ismee said what he has stated is demonstrated through the shareholders’ resolution which clearly showed how the board of directors has no authority over proposed investments sought by SRC International.

“So the claims sought by the first defendant (Najib) against me are absolutely baseless.

“Moreover, any investment decisions or approvals undertaken by SRC International are based on the decision and approval by the shareholder through resolutions which I have no control of.

“In fact, I was not given any authority to supervise the administration of SRC BVI whereby it was established without my knowledge and involvement as well,” he said.

Ismee was appointed director of SRC International in August 2011 and served on the board until his resignation in August 2014.

Imprisoned since August 23, 2022, Najib is serving his 12-year jail sentence and RM210 million fine for his conviction over the misappropriation of SRC International’s RM42 million funds, which has recently been reduced to six years of jail and RM50 million fine by the Pardons Board.

SRC, under its new management, sued Najib and its former directors Datuk Suboh Md Yassin, Datuk Mohammed Azhar Osman Khairuddin, Nik Faisal Ariff Kamil, Datuk Che Abdullah @ Rashidi Che Omar, Datuk Shahrol Azral Ibrahim Halmi, and Ismee in May 2021.

However, it later removed six names from the suit but retained Najib as the defendant.

Additionally, Najib has brought the former named SRC International directors as third-party respondents.

SRC as a plaintiff in the writ of summons had alleged that Najib had abused his power and obtained personal benefits from SRC International’s funds as well as misappropriated the funds. Najib was SRC’s Emeritus Adviser from May 1, 2012, until March 4, 2019.

SRC International, which is now wholly owned by the Ministry of Finance Incorporated (MoF Inc), is seeking general damages, exemplary, additional interest, costs and other appropriate relief provided by the court.

SRC International is currently seeking a declaration from the court that Naijib is liable to account for the company’s losses due to his breach of duties and trust.

The company is also seeking an order that Najib pay the US$1.18 billion in losses it suffered, and damages for breach of duties and trust; including an order that Najib compensate the sum of US$120 million which entered his bank account as well.