KUALA LUMPUR, May 2 — State investment firm 1Malaysia Development Berhad (1MDB) solicited a RM3 billion federal grant directly via Datuk Seri Najib Razak to set up SRC International Sdn Bhd as a special purpose vehicle to secure energy supplies, the High Court heard told.
Former deputy director general (Macro) of the Economic Planning Unit (EPU) in the Prime Minister’s Office, Datuk Kamariah Noruddin, testified today that she had difficulty handling 1MDB’s application in August 2010 as it was “striking” for a sitting prime minister to do so.
“It was a hard application to process as I do not normally handle applications from the prime minister. They (applications) are usually applied through the respective ministries.
“The letter addressed to Najib and the Finance Ministry, was signed by then 1MDB’s managing director Datuk Shahrol Azral Ibrahim Halmi,” she said, adding that the letter was also extended to other Cabinet members.
Kamariah was the 28th witness in Najib’s SRC International money-laundering and criminal breach of trust trial over RM42 million of funds from SRC International, a former 1MDB unit.
She said she did not make any comments on the application as it was handled by the late EPU director Datuk Noriah Ahmad, who had been instructed by former minister in the Prime Minister’s Department, Tan Sri Nor Mohamed Yakcop, to also prepare a summary on the matter.
“In general, the 1MDB letter outlined the proposal to establish SRC International in order to obtain and maintain strategic importance in extraction, processing, logistic services and trading of resources,” she said on the 12th day of the trial.
Some of the resources she told the court were; coal, oil and gas, steel and aluminium and uranium.
However, she said EPU only approved RM20 million out of RM3 billion in government grant to be provided for the setting up of SRC International for the purpose of securing coal and uranium.
“The RM20 million was just to establish the company. Maybe they needed to get the talent they required and for them to do due diligence.
“EPU generally supported the proposal, but we did not support SRC International to get involved in certain sectors like oil and gas as Petronas was already established for this purpose.
“Previously, TNB (Tenaga Nasional Bhd) was responsible for bringing in coal and uranium but now it does not mind having SRC International roped in as well. However, the dependency on TNB was high at 80 per cent. This SPV was planned to ensure energy security,” she said.
She added that EPU felt certain other sectors like steel and aluminium should be left to the private sector to be managed.
Kamariah then identified a memo written by Noriah where Nor Mohamed subsequently gave the green light and RM20 million of launching grant was approved via a letter dated October 12, 2010 which was then approved by Najib on October 15, 2010.
When cross-examined by Najib’s lawyer Tan Sri Muhammad Shafee Abdullah on whether 1MDB’s proposal was a harebrained scheme or a serious proposal, Kamariah replied the latter in the affirmative.
“In my opinion, it will be serious if you submit to the prime minister, so I would consider this a serious proposal,” she replied.
She also denied that the EPU had rushed to approve 1MDB’s application.
During re-examination, Kamariah said EPU disallowed the RM3 billion government grant to set up SRC International on grounds of a three-paged proposal with the entity yet to form at the date of application on August 24, 2010.
“The amount (RM3 billion) also constitutes about seven per cent of the nation’s development allocation budget.
“We do not have the privilege to have such a huge development budget to a company which has yet to be formed. It would be negligent on the part of EPU to do so,” she said.
According to Company Commission of Malaysia records, SRC International was only founded on January 7, 2011.
