KUALA LUMPUR, June 18 — Datuk Seri Najib Razak and his Cabinet had approved a month-long RM100 million short-term loan sourced from government coffers to pay off accumulated interests and late payment penalties in November 2015 over the RM4 billion loan SRC International Sdn Bhd received from the Retirement Fund Incorporated (KWAP).
Former deputy Chief Secretary to the government Tan Sri Mazidah Abdul Majid testified that the RM100 million loan proposed by the Finance Ministry (MOF) was necessary to avoid KWAP from declaring an Event of Default (EOD) which would have immediately terminated funding to SRC International.
“The termination will cause the federal government as the loan guarantor, to bear the full repayment and result in KWAP having to categorise the SRC loan as a doubtful loan in its 2015 financial statement.
“This situation will negatively impact the fiscal position and the government’s annual budget allocation,” she said in her testimony during Najib’s trial at the High Court here today.
The Cabinet meeting on November 5, 2015 was chaired by Najib as prime minister.
According to the memorandum, the doubtful loan status would have projected a negative perception of the government considering SRC International was a company under MOF’s Minister of Finance Incorporated (MoF Inc).
She also testified that the memorandum was approved without any objections from the Cabinet ministers present based on the minutes of the meeting.
“Based on the minutes of the Cabinet meeting then, there was no discussion among the ministers.
“Any Cabinet discussions will be dictated in the minutes to show that the Cabinet has acknowledged the matter or views presented which the November 5, 2015 minute lacked,” she said.
A total of 29 federal ministers including Najib was present during the meeting, with seven other ministers absent.
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 MoF Inc; while SRC International was parked directly under MoF Inc by the time of the second loan application.
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.
Mazidah is the 40th 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.
The trial before High Court Mohd Nazlan Mohd Ghazali resumes at 9am tomorrow.