SRC trial: Ex-director says Nik Faisal kept massive KWAP loan bids from board

Ex-SRC International director Tan Sri Ismee Ismail arrives at the Kuala Lumpur Court Complex June 12, 2019. — Picture by Firdaus Latif
Ex-SRC International director Tan Sri Ismee Ismail arrives at the Kuala Lumpur Court Complex June 12, 2019. — Picture by Firdaus Latif

KUALA LUMPUR, June 12 — Former SRC International Sdn Bhd chief executive Nik Faisal Ariff Kamil failed to inform the directors of his firm and its parent, 1MBD, when he applied for a RM3.95 billion loan from the Retirement Fund (Incorporated) (KWAP), the High Court heard today.

The applications also proposed for 1MDB to be the corporate guarantor for these loans.

Former SRC International director Tan Sri Ismee Ismail, the prosecution’s 39th witness, disclosed this during his cross-examination by defence lawyer Harvinderjit Singh during Datuk Seri Najib Razak’s SRC International RM42 million trial today. 

Ismee replied in the affirmative when Harvinderjit asked if he agreed there were no documents presented to either board detailing the loan application to KWAP. 

Harvinderjit: Would it be correct for me to say the board of SRC was not told through Nik Faisal, that he had applied for RM3.95 billion loan from KWAP?

Ismee: The board was not told, yup.

Harvinderjit: Is it correct for me to say the board was not told about him applying for the RM3.95 billion, where Nik Faisal had also proposed that 1MDB be the guarantor?

Ismee: Yes.

Ismee, who had been a1MDB director before moving to SRC, said the 1MDB board was not told Nik Faisal had met with representatives from KWAP or that the lender was seeking additional details about SRC.

Harvinderjit: Is it correct for me to say the 1MDB board were never told to agree to commit 1MDB as the corporate guarantor for the RM3.95 billion loan from KWAP?

Ismee: I can’t recall.

Harvinderjit: Never told if there was a board approval or if there was activity to guarantee a RM3.95 billion loan?

Ismee: Yes.

Harvinderjit: From your memory, the board of 1MDB alone cannot be used to deal with KWAP on this matter alone (needing approval from shareholders also)?

Ismee: Yes.

Datuk Seri Najib Razak is pictured at the Kuala Lumpur High Court June 12, 2019. — Picture by Firdaus Latif
Datuk Seri Najib Razak is pictured at the Kuala Lumpur High Court June 12, 2019. — Picture by Firdaus Latif

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 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.

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.

Ismee also agreed with Harvinderjit’s assertion that it was the incumbent duty of Nik Faisal to inform his fellow board members of the loan application, something which he failed to perform.

After sighting the loan application form to KWAP dated August 12, 2011, it was revealed to the court that Nik Faisal had sought the loan signing off within the capacity of the managing director and chief executive of SRC International.

Harvinderjit: You were never told about this (loan application to KWAP)?

Ismee: Never.

Harvinderjit: And this was after you joined SRC?

Ismee: Yes.

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.

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