Najib’s RM42m trial: What is SRC International and how it figures in the case

Datuk Seri Najib Razak arrives at the Kuala Lumpur Court Complex April 15, 2019. — Picture by Hari Anggara
Datuk Seri Najib Razak arrives at the Kuala Lumpur Court Complex April 15, 2019. — Picture by Hari Anggara

KUALA LUMPUR, April 16 — With Datuk Seri Najib Razak’s trial involving seven charges over RM42 million of SRC International Sdn Bhd funds currently underway, many may be curious about this investment company and its pivotal role in the case.

Some already know this was a subsidiary once owned by 1Malaysia Development Berhad (1MDB), with the latter becoming known worldwide for being mired in a huge financial scandal.

But what is SRC International? And what’s this about resignations within the company?

Here, Malay Mail gives you a quick breakdown of SRC International’s history, based on news reports and testimony provided by the first prosecution witness in Najib’s trial — Companies Commission of Malaysia (CCM) assistant registrar Muhamad Akmaludin Abdullah.

From humble beginnings

According to CCM records, SRC International was founded on January 7, 2011 as a private company limited by shares; among other things, the company deals with resources used in generating electricity.

Its nature of business was stated as “providing project associated with the exploration, extraction, processing, logistics and trading of conventional and renewable energy resources, natural resources and minerals including all other activities related thereto” as well as “any partnership, joint ventures or any arrangements for sharing profit.”

In the company’s early days, one of its two owners was Nik Faisal Ariff Kamil, who became a key figure between SRC International and 1Malaysia Development Berhad (1MDB) due to his role as 1MDB’s former chief investment officer.

In CCM documents dated January 17, 2011, director Nik Faisal was revealed as also holding the post of chief investment officer in SRC International, while the only other company director Vincent Beng Huat Koh was appointed investment director.

At that time, SRC International had only two units of shares worth RM1 each, with both men owning one each. Essentially, the company was a RM2 company.

SRC International was also not owned by 1MDB during this time.

A man walks past a 1 Malaysia Development Berhad (1MDB) billboard in Kuala Lumpur, March 30, 2015. — Picture by Yusof Mat Isa
A man walks past a 1 Malaysia Development Berhad (1MDB) billboard in Kuala Lumpur, March 30, 2015. — Picture by Yusof Mat Isa

Multiple changes

Fast forward eight months later from its establishment, SRC International experienced a dizzying number of internal changes in August, including new directors and a new owner which it now owes its fame to.

On August 1, then 1MDB director Tan Sri Ismee Ismail — who is otherwise also known as Tabung Haji’s former CEO — was appointed a director at SRC International.

On the same day, another 1MDB director named Shahrol Azral Ibrahim Halmi was appointed SRC International’s chief executive officer (CEO).

Following the new appointments, Beng resigned from his director post a day later on August 2.

In the same month, Nik Faisal became the company’s managing director from August 11.

In between the multiple changes, SRC International also transformed from a RM2 company to one with a paid-up capital of RM1 million.

On August 15, SRC International increased its allotment of shares to 1 million units, with these new 999,998 units of shares worth RM1 each then issued to 1MDB. (This made 1MDB the majority shareholder and effectively the owner of SRC International.)

Towards the end of the month, two new directors — Datuk Che Abdullah @Rashidi Che Omar and Datuk Suboh Md Yassin — were officially appointed on August 22.

The appointments of Che Abdullah and Suboh were on top of the existing three directors Nik Faisal, Shahrol Azral and Ismee, which meant that SRC International as of August 2011 had a total of five directors (the initial five).

Mass resignations and current state of SRC

Of the initial five, the first one to resign from his SRC International director position was 1MDB’s Shahrol Azral, who at the same time also quit his position of SRC International CEO, effective May 15, 2012.

It is, however, interesting to note that Ministry of Finance (MOF) Incorporated took over SRC International from 1MDB on February 14, 2012. (At the time that this took place, Najib was the finance minister and he claimed the ownership transfer did not incur costs to the Finance Ministry as it was via 1MDB’s payment of dividends in the form of SRC International shares.)

Two years later, a new director named Datuk Mohammed Azhar Osman Khairuddin was appointed on July 29, 2014. He was subsequently appointed Group CEO and Group President on September 1, 2014.

The second of the initial five to resign as director was Ismee who stepped down on August 15, 2014, followed by Che Abdullah on April 30, 2015.

Mohammad Azhar — who was not part of the initial five — was the last of the directors to resign on February 22, 2017.

Only two of the initial five remained as of August 2018, namely Nik Faisal and Suboh. (According to CCM records, Nik Faisal had however resigned from his other position as manager on September 1, 2014.)

The changes in SRC International did not only happen at its senior management level. CCM records also showed multiple changes in the firm’s company secretary.

It is unclear what was the reason behind the changes, but the named secretary Lim Poh Seng (who was appointed on January 17, 2011) was replaced two months later on March 31 by Goh Gaik Kim, but the two switched places on August 22 the same year when Goh resigned and Lim was appointed company secretary.

Lim would later relinquish the post on May 1, 2015 and Chee Suwen took over.

Chee quit the position on October 25, 2017 and was replaced by V. Thirukumar who is still the named secretary as of August 2018.

Back to the present

MOF Inc currently remains the majority shareholder of SRC International.

The reason that SRC International is back in the news is due to Najib’s trial, where he is accused of money laundering by allegedly receiving a total of RM42 million from SRC International in July 2014 in his private bank accounts.

The first prosecution witness Muhamad Akmaludin Abdullah took the stand on the first and second day of trial, while the second prosecution witness Azizul Adzani Abdul Ghafar testified yesterday.

Najib’s lawyers are expected to cross-examine Azizul Adzani today, which is also the third day of trial.

Azizul, who is a Bank Negara Malaysia manager, had testified that the central bank had in 2015 raided an Ambank branch in Kuala Lumpur to obtain details on several bank accounts, including Najib’s personal bank accounts and three SRC International accounts.