KUALA LUMPUR, 29 — Civil servants’ pension fund KWAP’s investment panel did not feel that it had to approve a multi-billion ringgit loan that was sought by SRC International Sdn Bhd because of a handwritten note of approval by Datuk Seri Najib Razak, KWAP’s former CEO said today.
During Najib’s trial today, former KWAP CEO Datuk Azian Mohd Noh agreed that the pension fund’s investment panel did not approve in its July 5, 2011 meeting a proposed loan to SRC International, despite KWAP receiving a June 2011 letter with then prime minister Najib’s note of approval.
Najib’s lawyer Harvinderjit Singh had asked Azian: “You have a letter from PM, starting with proposal, goes to (KWAP) Fixed Income Department, approved by the investment committee, goes to investment panel, they never felt any compulsion to approve a loan?”
“If you use the word compulsion, you are right,” Azian then replied.
Azian also pointed out that “influenced” and “compelled” are different words, but did not elaborate.
The June 3, 2011 letter from SRC International proposing a RM3.95 billion loan from KWAP was addressed to Najib, with Najib adding on his note of approval on June 5, 2011.
Azian confirmed that she had read Najib’s note together with the June 2011 letter’s title, taking it to mean that the then prime minister agreed to SRC International’s proposal for KWAP to “invest” RM3.95 billion into the company.
The letter was hand-delivered by Najib’s then special officer Datuk Azlin Alias to Azian in a hotel lobby after office hours in June 2011.
Azian today confirmed that she had the next day discussed the letter with KWAP chairman Tan Sri Wan Abdul Aziz Wan Abdullah, and that both of them did not instruct KWAP’s Fixed Income Department to draft an investment paper with the loan proposal for the KWAP investment panel’s consideration.
Azian confirmed that both she and the KWAP chairman had left it to the Fixed Income Department to assess and made any recommendations they wanted to the investment panel.
The Fixed Income Department later prepared an investment paper to propose KWAP consider lending only RM1 billion, instead of the RM3.95 billion sought by SRC International.
The Fixed Income Department’s draft investment paper was approved by an investment committee chaired by Azian, who approved it for presentation on July 5, 2011 for KWAP’s investment panel to consider for approval.
During cross-examination, Harvinderjit asked “At no point in time, you or the Fixed Income Department said ‘we must approve this because of this letter”, to which Azian replied “Correct.”
Harvinderjit: Nobody took this to be instruction?
When asked to confirm if no one at KWAP took the June 2011 letter to mean loan procedures could be disregarded, Azian replied: “Definitely I did not take it as instruction.”
Azian then said she and the KWAP chairman had met Najib to inform that the proposed loan considered was only for RM1 billion, as suggested by an investment panel member during the July 5, 2011 meeting.
In a July 19, 2011 meeting where KWAP’s investment panel considered a second investment paper that proposed a revised sum of RM2 billion, Azian said she had informed panel members that the KWAP chairman was told by the then prime minister Najib to “expedite” the loan to SRC International and that RM2 billion would suffice.
Asked by Harvinderjit if SRC’s subsequent request for a lower RM2 billion loan sum was independent from Najib’s remarks to speed up the loan approval, Azian said they were “two different things” and agreed that both occurred at different times.
Asked if KWAP’s Fixed Income Department’s second investment paper proposing a RM2 billion loan was not linked to Najib’s comments to the KWAP chairman, Azian replied: “There is no evidence to tie it together”.
She agreed that the investment paper presented in the July 19, 2011 meeting did not contain references to the KWAP chairman’s discussion with Najib where the latter said RM2 billion would be enough.
Harvinderjit pointed out that KWAP’s loan system included multiple departments including for the handling documentation and separately for the release of funds, and also the engaging of an independent law firm to check all is in order before the money lent is released.
Azian then agreed that there are checks and balances throughout the procedure of obtaining a loan from KWAP.
She later agreed that KWAP’s investment panel was shown to have some form of exercise of independence in judgment, when it did not follow the recommendations in the second investment paper for the proposed loan.
SRC International later sent a letter dated August 12, 2011 to Azian, with the company departing from its initial plans for a RM3.95 billion loan and instead seeking for a RM2 billion loan from KWAP to be backed by government guarantee.
KWAP’s Fixed Income Department prepared a third investment paper that led to a RM2 billion loan finally being approved.
The protracted process that involved a total of three internal loan proposals via investment papers finally saw RM2 billion given out by KWAP as a loan to SRC International in August 2011, with the loan backed by a government guarantee letter signed by then Finance Minister II Datuk Seri Ahmad Husni Hanadzlah.
KWAP in 2012 gave a second RM2 billion loan to SRC International, again due to a government guarantee letter that was this time signed by Najib.
Azian is the 38th prosecution witness of Najib’s ongoing trial involving seven charges of abuse of position, criminal breach of trust and money-laundering over RM42 million of SRC International’s funds.
During the course of the trial, witnesses have testified that KWAP gave a total of RM4 billion in loans to SRC International, with money allegedly flowing through other companies before being transferred into Najib’s accounts.
The trial before High Court judge Mohd Nazlan Mohd Ghazali will resume on June 10, with Azian expected to continue testifying.