SRC trial: Najib signed federal guarantee for KWAP’s second RM2b loan to ex-1MDB unit

Datuk Seri Najib Razak leaves the Kuala Lumpur Court Complex May 6, 2019. — Picture by Firdaus Latif
Datuk Seri Najib Razak leaves the Kuala Lumpur Court Complex May 6, 2019. — Picture by Firdaus Latif

KUALA LUMPUR, May 6 — Datuk Seri Najib Razak personally signed off on a government guarantee for SRC International Sdn Bhd’s second loan of RM2 billion from the Retirement Fund Incorporated (KWAP), the High Court heard today.

Former KWAP official Amirul Imran Ahmat testified to seeing the letter for the government guarantee of the 2012 loan.

“I subsequently sighted ‘Letter of Guarantee Relating to the Financing Facility of RM2,000,000,000 Granted to SRC International Sdn Bhd’ dated March 27, 2012 that was the Government of Malaysia’s guarantee towards KWAP’s loan to SRC for the sum of RM2 billion for a period of 10 years.

“This letter of guarantee was signed by Datuk Seri Mohd Najib Tun Hj Abd Razak as the prime minister, finance minister,” he told the High Court today.

For this second loan of RM2 billion, Amirul Imran testified that the loan agreement dated March 27, 2012 was signed between KWAP and SRC International, and that he was told by another KWAP official on March 28, 2012 that the funds had been released and placed into SRC International’s bank account.

Amirul Imran previously testified that the Malaysian government had also provided a government guarantee in 2011 for KWAP’s first loan of RM2 billion to SRC International, but with that letter of guarantee dated August 26, 2011 signed by then second finance minister, Datuk Seri Ahmad Husni Hanadzlah, instead.

Amirul Imran, who is the 29th prosecution witness in Najib’s ongoing trial over RM42 million of SRC International’s funds, mentioned the former prime minister several times during his testimony today and last week.

Among other things, Amirul Imran testified that Najib had in a handwritten note indicated his approval of SRC International’s 2011 application for a RM3.95 billion loan from KWAP; KWAP later only issued RM2 billion in this first loan.

One mention of Najib’s name involved the change in how KWAP’s second RM2 billion loan was paid out to SRC International.

Amirul Imran testified that SRC International had in a March 13, 2012 letter applied for the second loan of RM2 billion from KWAP, and that he had on March 14 received a copy of SRC International’s company resolution that he said was the government’s approval to guarantee this loan amount.

Amirul Imran said he then drafted a paper for the proposed RM2 billion government-guaranteed loan to be released in tranches according to a schedule following instructions by KWAP’s then-chief investment officer, Ahmad Norhisham Hassan, who later presented the paper on March 20, 2012 to KWAP’s investment panel.

He said he was told the investment panel had approved the proposed RM2 billion loan with the condition that it be government-guaranteed and for funds to be issued via a schedule or “progress payment”, as well as to review all government-guaranteed loans to prevent an “over-concentration” of risk with loans to SRC International.

Amirul Imran testified that KWAP chief executive Datuk Azian Mohd Nor told him on March 22, 2012 that the latter had met with Najib, then Treasury secretary-general Tan Sri Mohd Irwan Serigar Abdullah and KWAP board chairman Tan Sri Wan Abdul Aziz Wan Abdullah over the “progress payment” condition.

The March 22 meeting involving the KWAP CEO and Najib was mentioned by SRC International director Nik Faisal Ariff Kamil in an email on the same day to Azian, with Nik Faisal saying among other things that he had “just received a call from YAB Prime Minister and Minister of Finance” regarding the decisions made as a result of the meeting.

Amirul Imran said he then prepared in March 2012 a circular paper for the KWAP investment panel to approve the change in payment of the RM2 billion from “progress payment” to “one lump sum” to SRC International, according to the results of the KWAP CEO’s discussion with the prime minister.

Amirul Imran testified to being put under pressure to expedite the process for the lending of KWAP funds to SRC International. — Picture by Firdaus Latif
Amirul Imran testified to being put under pressure to expedite the process for the lending of KWAP funds to SRC International. — Picture by Firdaus Latif

When questioned by deputy public prosecutor Datuk Mohd Ishak Yusoff, Amirul Imran confirmed that he had sought copious information from SRC International in relation to the loans, but received only an estimated 25 per cent of what he requested.

He also confirmed that this forced him to act based on the limited information given.

Amirul Imran also revealed that he had been told to speed up the loan process for SRC International.

“There’s a lot of pressure to expedite them all. That’s why you notice the date of the letter of offer and facility agreement, same date, because all have been prepared upfront,” he said.

Amirul Imran also said today that the two loans to SRC International totalling RM4 billion were “among the biggest” agreed by KWAP throughout his years of working with the fund.

Today is the 13th day of Najib’s trial on seven charges of criminal breach of trust, abuse of position and money-laundering of RM42 million of funds belonging to SRC International.

According to Amirul Imran’s testimony, KWAP’s first RM2 billion loan to SRC International was while it was a 1MDB subsidiary, while the second RM2 billion loan was after the company’s ownership was transferred to the Finance Ministry’s Minister of Finance (MOF) Incorporated.

Based on his testimony, SRC International had in June 2011 initially applied for a loan of RM3.95 billion, but it was eventually given a loan amount of RM2 billion after the Finance Ministry told KWAP in an August 22, 2011 letter that the government would guarantee the sum.

KWAP then issued a letter of offer on August 23, 2011 that was received by SRC International on August 26, 2011.

The loan agreement for the RM2 billion loan was signed on August 26, 2011, which was the same day as the date of the government guarantee letter signed by then Finance Minister II Datuk Seri Ahmad Husni Hanadzlah and also when SRC International requested for the RM2 billion to be placed into its AmIslamic Bank account.

As for the second RM2 billion loan, the entire loan process that began with a loan application dated March 13, 2012 took about two weeks.