In SRC’s US$1.1b suit against Najib, former director admits signing off RM1.8b investment without due diligence after nod from ex-PM

KUALA LUMPUR, April 17 — A former director of SRC International Sdn Bhd told the High Court today he had signed off a RM1.8 billion investment the company undertook without performing due diligence since then prime minister Datuk Seri Najib Razak had given his approval.

Datuk Shahrol Azral Ibrahim Halmi was testifying as a third party in SRC International Sdn Bhd’s US$1.18 billion (RM5.58 billion) civil suit against Najib.

Under cross-examination, Shahrol Azral said that due diligence was not done because Najib had already given his approval in writing for these investments from funds originating from a loan of RM4 billion which SRC International obtained from the Retirement Fund Incorporated (KWAP) — a statutory body which manages the pension scheme for Malaysia’s civil servants.

Initially, the RM1.8 billion was to acquire PT ABM Investama and Bumi Resources Tbk PT in Indonesia and Gobi Coal and Energy Limited and Erdens-Tavan Tolgoi in Mongolia as per Bank Negara Malaysia’s (BNM) prerequisites regarding the use of the first KWAP loan.

Despite having reservations, Shahrol Azral nevertheless signed off the purported investment by way of a Director’s Circular Resolution.

“It wasn’t only instructions; this was signed by the PM, who was also the former finance minister and shareholder of 1MDB, so that carried a lot of weight.

“We tried to find as much info as we could but when it came to execution, the PM signed off so we had to do it.

“I felt I was under obligation from the instructions of the PM. I would’ve preferred for information to be available, but I went ahead and signed it,” he told Najib’s lawyer Harvinderjit Singh.

Shahrol Azral has consistently maintained throughout his time on the witness stand that the SRC International board of directors took Najib’s approval as an instruction from the prime minister and executed it.

He previously testified that the sole and exclusive shareholder of SRC International was Minister of Finance (Incorporated), and as such the board of directors was bound to heed the advice of Najib as finance minister at that time.

An offshore asset recovery specialist — testifying as a witness — had previously told the court the majority of the KWAP loans were neither to acquire the four entities listed nor invested in the energy sector as stipulated in BNM’s permission during her investigation on the flow of SRC International’s funds.

“I took it that the prime minister had his own plans that I was not privy to, so I went along with the Director’s Circular Resolution to approve the investment,” Shahrol Azral added.

Harvinderjit then suggested that Shahrol’s actions were a breach of duty as a director of the company, to which he disagreed.

The hearing before Commercial High Court judge Datuk Ahmad Fairuz Zainol Abidin resumes May 6.

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, had filed legal action against Najib and its former directors Datuk Suboh Md Yassin, Mohammed Azhar Osman Khairuddin, Nik Faisal Ariff Kamil, Datuk Che Abdullah @ Rashidi Che Omar, Shahrol Azral and Tan Sri Ismee Ismail in May 2021.

However, later, it removed five names from the suit and retained Najib and Nik Faisal 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 Advisor 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 Najib 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 (RM5.5 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.