Najib’s trial: Witness concedes unknown if SRC used KWAP loans for CSR

Datuk Seri Najib Razak leaves the Kuala Lumpur Court Complex May 8, 2019. — Picture by Yusof Mat Isa
Datuk Seri Najib Razak leaves the Kuala Lumpur Court Complex May 8, 2019. — Picture by Yusof Mat Isa

KUALA LUMPUR, May 8 — A witness in Datuk Seri Najib Razak’s ongoing trial today conceded that he did not personally know if SRC International Sdn Bhd had used money borrow from civil servants’ pension fund Retirement Fund Incorporated (KWAP) for corporate social responsibility (CSR) programmes.

Former KWAP official Amirul Imran Ahmat had previously testified that SRC International would trigger an “event of default” and loan termination if any of the funds totalling RM4 billion from KWAP were used for CSR, as it would breach the terms of the loans that were for specific purposes such as working capital and investment in natural resources.

Today, Najib’s lawyer Harvinderjit Singh during cross-examination asked: “Whether SRC used for CSR is something beyond your knowledge?”

Amirul Imran then replied: “Yes.”

When asked why Amirul Imran had included the comment regarding CSR in his witness statement, he replied that it was in response to a question from the Malaysian Anti-Corruption Commission (MACC) investigators.

Amirul Imran said MACC had asked him if SRC International’s loans from KWAP could be used for CSR activities, confirming that they were seeking his opinion on the matter.

Harvinderjit then argued that there was a difference between borrowed funds drawn down from the KWAP or funds that were generated from investment activities using the loan funds.

Amirul Imran then agreed that funds that were due to investment could be used in any way.

Harvinderjit then asked: “In order for anyone to come up with the position that monies utilised have been in breach of the financing, one must be able to critically show it was the same money drawn down from KWAP?”

In response to the question, Amirul Imran agreed.

Amirul Imran is the 29th prosecution witness in Datuk Seri Najib Razak’s trial involving seven charges of abuse of position, money-laundering, criminal breach of trust over RM42 million of funds belonging to former 1MDB subsidiary SRC International.

Former KWAP assistant vice president Amirul Imran Ahmat is pictured at the Kuala Lumpur High Court May 6, 2019. — Picture by Firdaus Latif
Former KWAP assistant vice president Amirul Imran Ahmat is pictured at the Kuala Lumpur High Court May 6, 2019. — Picture by Firdaus Latif

During the trial, witnesses had testified that money flowed from SRC International into the company’s subsidiary Gandingan Mentari Sdn Bhd, while the latter was also shown to have transferred money to SRC International’s purported corporate social responsibility partner Ihsan Perdana Sdn Bhd.

Witnesses had also confirmed to the court that Ihsan Perdana had transferred out a total of RM42 million into two of Najib’s personal accounts at AmBank.

One of these AmBank accounts belonging to Najib was used to issue 14 cheques amounting to about RM7.2 million to various recipients, including to political parties, renovation works such as water tank installations at Najib’s residences, and a welfare home for orphans.

Amirul Imran was assistant vice-president of KWAP’s fixed income department during the time when the two loans totalling RM4 billion were given to SRC International, and was then involved in getting supporting documents from SRC International and drafting documents linked to the loans for KWAP’s investment panel to approve.

During re-examination, deputy public prosecutor Datuk Ishak Mohd Yusoff asked Amirul Imran to clarify information regarding the additional Shariah-compliant contracts that were signed for KWAP’s two RM2 billion loans to SRC International in 2011 and 2012.

Amirul Imran confirmed that it was ultimately the facility agreement or loan agreement that governed the two RM2 billion loans.

“Basically, the asset sale agreement and asset purchase agreement are just a method of financing to facilitate the Shariah-compliant part.

“At the end of the day, it is still financing. Hence why there is a facility agreement and why in the facility agreement, it’s called financier and customer, and not vendor and purchaser,” Amirul Imran explained.

Yesterday, Harvinderjit had highlighted that the financing documents for the two RM2 billion loans in 2011 and 2012 had both came in sets of three: The facility agreement, asset sale agreement and asset purchase agreement.

The additional documents were part of the Shariah-compliant financial facility known as Bai’ al-’inah, where SRC International agreed in 2011 and 2012 to sell its assets to KWAP at the price of RM2 billion, and agreed to buy back the same assets from KWAP at a later date with a different price of RM4,687,906,694.77 or over RM4.68 billion.

Based on information available online, Bai’ al-’inah facility is understood to be a method involving the deferred buy back of assets at a price higher than the price it was sold for, essentially acting as a Shariah-compliant substitute for conventional loans with interest that circumvents the problem of riba or unjust interest which is forbidden in Islam.

Amirul Imran previously testified that the funds totalling RM4 billion had been transferred by KWAP to SRC International.

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