SRC trial: KWAP investment panel not bound by instructions from any federal minister to approve loans, High Court told

Vice-president of KWAP's legal and secretariat department Azlida Mazni Arshad is pictured at the Kuala Lumpur Court Complex, May 14, 2019. ― Picture by Yusof Mat Isa
Vice-president of KWAP's legal and secretariat department Azlida Mazni Arshad is pictured at the Kuala Lumpur Court Complex, May 14, 2019. ― Picture by Yusof Mat Isa

KUALA LUMPUR, May 14 — The Retirement Fund Incorporated’s (KWAP) investment panel need not obey instructions from the prime minister or Cabinet members when approving loans within its purview, the High Court heard today.

The prosecution’s 35th witness in Datuk Seri Najib Razak’s trial over RM42 million from SRC International Sdn Bhd, KWAP Legal and Secretarial Department vice president Azlida Mazni Arshad, testified that the panel is expected to act and decide independently in such matters.

She said this when Najib’s defence lawyer, Harvinderjit Singh, asked about the procedural steps that are taken before the panel approves a loan.

Harvinderjit: Do you agree the investment panel is not bound by instructions of the prime minister?

Azlida: Ideally, they are not bound.

Harvinderjit: Do you agree they are not bound to follow recommendations made in an Investment Paper submitted to them?

Azlida: Yes.

Harvinderjit: They (the panel) can choose to reject (the loan application) outright?

Azlida: Yes.

Last week, Azlida testified that KWAP received instructions from Najib in 2011 to hasten the loan approval for the first RM2 billion to be channelled SRC International.

Azlida explained to Harvinderjit that loans not backed up with sufficient documentation would usually be rejected by KWAP’s Fixed Income Department, the body that oversees investment portfolios undertaken by the pension fund.

Harvinderjit: If the Fixed Income Department feels they do not have enough information, let's say (they only have) 25 per cent of the needed documents, he (the officer in charge) could have recommended to his superior to reject the application?

Azlida: Ideally, that is the way.

This clarification was in response to the testimony made last week by the prosecution’s 29th witness, KWAP’s Fixed Income Department’s former vice president Amirul Imran Ahmat, who said that he had sought copious information from SRC International.

The information being sought, he had said, was in relation to the loans but only received an estimated 25 per cent of what he had requested.

Amirul Imran was the KWAP official that drafted the paper for the proposed RM2 billion loan, as a proposed investment for KWAP’s investment panel to consider.

Azlida during today’s proceedings also noted how it was the prerogative of Investment Panel to verify, defer, or request additional information from the loan applicants, by way of a meeting between the parties involved.

She also agreed with Harvinderjit that the investment panel could have requested for more information before approving the second RM2 billion loan to SRC International, and concurred with Najib’s lawyer that the panel had instead chosen to rely on the security of the government guarantee that was given with the first RM2 billion loan.

She had verified last week that former KWAP chief executive officer Datuk Azian Mohd Nor had told in the investment panel meeting on July 19, 2011, that the prime minister had informed KWAP’s chairman to expedite the approval process of the loan to SRC International.

In today’s proceedings, however, Azlida confirmed there was no written record from the minutes of the investment panel meeting back in 2011 that stated the loan was approved only because they were instructed to do so by Najib who prime minister at the time.

Harvinderjit then posed to Azlida that such an instruction to the panel would have been in the minutes if it were true, which she agreed.

She also agreed that the investment panel were not ‘forced’ to approve both RM2 billion loans to SRC International, in Aug 2011 and March 2012 respectively.

Today marks the 17th day of Najib's trial on seven charges of criminal of breach of trust (CBT), abuse of position, and money-laundering over RM42 million funds belonging to SRC International.