KUALA LUMPUR, May 29 — The civil servants’ pension fund KWAP would have preferred to receive a government guarantee for its second RM2 billion loan to SRC International Sdn Bhd before releasing the funds in 2012, but had transferred the money first due to the Finance Ministry’s assurance, the High Court heard today.
Former KWAP CEO Datuk Azian Mohd Noh, 66, was asked if there was nothing wrong with releasing the RM2 billion to SRC International Sdn Bhd before the actual letter of government guarantee reached KWAP.
“No, it would have been ideal if we got the guarantee documents, but we disbursed the loan.
“We disbursed, as I said earlier, based on assurance from a Ministry of Finance officer,” she said on the 20th day of former prime minister and former finance minister Datuk Seri Najib Razak’s trial.
KWAP had on March 23, 2012 offered a second loan of RM2 billion to SRC International with the condition that it was backed by a government guarantee, and with the loan agreement signed on March 27, 2012.
But in a March 28, 2012 letter to KWAP, the Finance Ministry said the Malaysian government had via a Cabinet decision in February 2012 agreed to guarantee SRC International’s RM2 billion loan, further asking KWAP to consider releasing the funds first while the government undertakes to hand over the government guarantee within 10 working days.
The funds were released, while the government guarantee dated March 27, 2012 and signed off by Najib was later received by KWAP.
Also during cross-examination, Azian was asked whether she had any doubt that the government guarantee would reach within 10 days.
She replied that she had to “rely” on the March 28, 2012 letter by the Finance Ministry, and that she trusted that it came from a “responsible” officer of the Finance Ministry.
“We agreed to disburse the loan based on the surat perakuan (letter of undertaking) by a Finance Ministry officer, and the letter stated that the Cabinet had approved that guarantee,” she later said.
When asked by Najib’s lawyer Datuk Mohd Yusof Zainal Abiden if this situation — of KWAP releasing money to a borrower in a government-guaranteed loan before the guarantee letter reached — has happened before, Azian replied: “Not during my career in KWAP.”
Azian was Retirement Fund Incorporated’s (KWAP) CEO from March 2007 to March 2013, but had also served there during 1991-1992 and 1995-1997 before it was incorporated.
Another lawyer for Najib, Harvinderjit Singh, suggested that a Finance Ministry letter informing of the Cabinet’s approval to a government guarantee for a loan meant “it’s a done deal barring any” external factors.
“I wouldn’t say it’s a done deal,” she replied.
When asked by Harvinderjit if she was aware of any cases where the government withdrew its decision after agreeing in writing to grant a guarantee, Azian said: “Not that I recall.”
She acknowledged Harvinderjit’s suggestion that the matter of the government guarantee would have to go back before Cabinet if the government wanted to cancel the guarantee approval.
When asked by Yusof if KWAP gave out loans to SRC International primarily because of the government guarantee, Azian replied: “The guarantee strengthens the justification of the loan, because it’s guarantee, it’s zero risk to KWAP, it’s mitigating risk.”
Azian also agreed that KWAP felt it was safe to give a loan to SRC International due to the government guarantee.
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 in 2011 and 2012 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.