Ex-SRC director took it upon himself to get company records audited by Deloitte, court told

Former SRC International Sdn Bhd director Tan Sri Ismee Ismail (centre) is pictured at the Kuala Lumpur Court Complex June 13, 2019. — Picture by Yusof Mat Isa
Former SRC International Sdn Bhd director Tan Sri Ismee Ismail (centre) is pictured at the Kuala Lumpur Court Complex June 13, 2019. — Picture by Yusof Mat Isa

KUALA LUMPUR, June 13 — A former SRC International Sdn Bhd director explained to the High Court today the chain of events that took place which led to his resignation, citing the lack of transparent reporting as the main reason for his departure.

Tan Sri Ismee Ismail, who helmed the position as one of the company directors from Aug 2011 to Aug 2014, elaborated on how former chief executive Nik Faisal Ariff Kamil managed to convince board members into believing the company was being governed well under his stewardship, despite doing otherwise.

Ismee, the 39th witness at Najib’s RM42 million SRC International trial, said these during the continuation of his cross examination by defence lawyer Harvinderjit Singh today.

The former director then went on to pin point an incident back in 2013 where the board was asked to sign off on accounts documents by Nik Faisal, with the latter stating it had already been audited.

Despite finding out of apparent transgressions by Nik Faisal, Ismee admitted he had not escalated the matter to the Prime Minister or company shareholders, the Minister of Finance Incorporated (MoF Inc), and instead took it upon himself to get the accounts audited by hiring auditing firm Deloitte Malaysia to vet the documents.

At that time, Najib held the position of the prime minister, finance minister, and acted as advisor emeritus to SRC International, with Ismee over the course of proceedings saying how the board had full confidence in Nik Faisal’s corporate governance saying there was no reason to doubt information from him that said to have come from Najib.

Harvinderjit: Would you accept that at some certain point in time, it would have been incumbent on you to escalate the matter either to MKD (MoF Inc), or to the MoF Inc department, or to the PM directly if you got the impression that Nik Faisal wasn’t telling the truth.

Ismee: Agree.

Harvinderjit: Even if you got the impression that Nik Faisal was not telling the truth, there must have been some event that in your mind there’s something tersirat (hidden agenda), thinking ‘this can’t be right’?

Ismee: There’s no other event except the closing of the accounts of SRC (International).

(Referring to company documents)

Harvinderjit: This is the 2013 audit of the accounts, which were the ones, on behalf of management, Nik Faisal said please sign off this resolution?

Ismee: True.

Harvinderjit: The board was presented with audited accounts?

Ismee: When they were presented to the board, it wasn’t audited.

Harvinderjit: What was the board as to sign off for?

Ismee: That the accounts be audited.

Harvinderjit: In newspapers, we were quoted saying it was not audited?

Ismee: Yes

Harvinderjit: And in that point in time you didn’t think it was serious enough to doubt the words of Nik Faisal?

Ismee: I decided to first investigate the reason as to why it (lack of proper governance) had come so far.

Ismee explained how he then engaged Deloitte Malaysia and provided them the necessary documents required to properly have the accounts audited, saying as director he felt responsible for the lack of proper management.

He elaborated how he had personally scrutinised unaudited company accounts over the course of two weeks, going back and forth with the auditors supplying them documents that were required.

Harvinderjit: At that point I think it would be incumbent on you as chairman, with the people of Malaysia in your mind, to escalate the matter to the PM?

Ismee: I disagree with that. One, I need to investigate the cause of it, so I asked (auditors) what is the delay with the audit and they said they haven’t received audit papers from the company management. So, took responsibility to send to them (Deloitte) what they wanted, I asked them what they needed and they gave me a list of documents they required.

Harvinderjit: So you were dealing with auditors directly?

Ismee: I was dealing with banks, getting signatures, so what I did, I had this document on my table for two weeks and one by one every day I went through, together with the auditors. Then I took the responsibility to close the account.

When reading out his witness statement during examination in chief on Monday, Ismee revealed how he had resigned from his position after not being able to subscribe to Nik Faisal’s corporate governance style and financial management habits.

He had stated touched on the 2013 audit of accounts that led to his departure but had at that time not elaborated on the incident in entirety.

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.