KUALA LUMPUR, June 12 — A former SRC International Sdn Bhd director today revealed how the board was made to understand that Datuk Seri Najib Razak, as the advisor emeritus, had the final say in all major company decisions despite having a board of directors and shareholders.
Tan Sri Ismee Ismail, the 39th prosecution witness of Najib’s SRC International RM42 million trial, said he acknowledged Najib as the final decision maker in the line of reporting done by the company during his three-years as director from August 2011.
He was answering defence lawyer Harvinderjit Singh, who questioned Ismee on the company’s line of reporting concerning decisions on potential investments to be undertaken by SRC International.
Harvinderjit: All the minutes, talk about is a functional reporting line to the prime minister, it does not mean get his approval.
Ismee: It refers to ‘Reporting to me (Najib), you need to get my agreement.’
Harvinderjit: Or it could just mean furnishing regular reports (to Najib).
Ismee: That is not what is said (of regular reports).
Ismee today also asserted there were decisions made by Najib within his capacity, also referred to as the ‘ultimate shareholder’.
He said there were decisions of the board of directors that were aligned with the advice of Najib, but revealed there were also decisions made among its shareholders 1Malaysia Development Berhad (1MDB) and Najib.
Documents of SRC International’s board resolutions and minutes were then produced in court, with Harvinderjit scrutinising them along with Ismee, where they then came upon a minute of a meeting between Nik Faisal and Najib.
The minutes of the apparent meeting had detailed how Najib ordered SRC International’s managing directors to transfer company funds into an offshore account for better returns.
(Referring to minutes)
Harvinderjit: So this resolution was from the ultimate shareholder, and it wasn’t the decision of board to just adopt the resolution of shareholders?
Harvinderjit: Nik Faisal (former SRC International CEO) comes with this resolution, and the board accepted it at face value?
Ismee: It was a good document.
Harvinderjit: Whether or not it was signed by Najib or not you won’t know?
Ismee: I had no reason to doubt.
Yesterday, Ismee testified that Najib at an extraordinary general meeting (EGM) in 2012, had added a clause in the constitution of SRC International to make him the ‘adviser emeritus’ of the company.
He had said the amendment was made known in the shareholders’ minutes of April 23 that year, which the latter had signed on a letter addressed to the board indirectly giving Najib control of the company.
Previously, former KWAP chief executive Datuk Azian Mohd Noh said the pension fund had received a letter from SRC International proposing a RM3.95 billion loan to KWAP in June 2011, with then prime minister Najib’s note of approval.
KWAP’s Fixed Income Department (FID) later prepared an investment paper to propose KWAP consider lending only RM1 billion, instead of the RM3.95 billion sought by SRC International.
SRC International later sent a letter in August 2011, with the company departing from its initial plans for a RM3.95 billion loan and instead of seeking a RM2 billion loan from KWAP to be backed by government guarantee.
KWAP’s FID then prepared a third investment paper that led to a RM2 billion loan finally being approved.
Ismee will continue to testify tomorrow at 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 Retirement Fund (Incorporated) (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.
At the time of the first loan application, SRC International was the wholly-owned subsidiary of 1MDB which was owned by the Finance Ministry’s Minister of Finance Incorporated (MoF Inc); while SRC International was parked directly under MoF Inc by the time of the second loan application.