Treasury official says no govt guarantee for SRC International’s RM2b loan without Najib’s approval

Datuk Seri Najib Razak is pictured at the Kuala Lumpur High Court Complex June 19, 2019. — Picture by Firdaus Latif
Datuk Seri Najib Razak is pictured at the Kuala Lumpur High Court Complex June 19, 2019. — Picture by Firdaus Latif

KUALA LUMPUR, June 19 — SRC International Sdn Bhd would not have obtained a government guarantee in 2012 for a second RM2 billion loan from the Retirement Fund Incorporated (KWAP) without the approval of then finance minister Datuk Seri Najib Razak.

The prosecution’s 41st witness Afidah Azwa Abdul Aziz told the High Court today that the Loans Guarantee (Bodies Corporate) Act 1965 restricts government-linked companies from obtaining a second government guarantee for a second loan if the first loan is still outstanding.

The only exception, Afidah — the strategic investment department deputy secretary in the Finance Ministry — said under questioning from deputy public prosecutor Datuk Suhaimi Ibrahim, is the approval of the finance minister.

Suhaimi: According to Section 6 of this Act, was there any restriction to obtain the second government guarantee?

Afidah: There is.

Suhaimi: Who could have given the approval if it wants to get a second government guarantee?

Afidah: It can be given exception with approval from the minister.

Suhaimi: Who is the minister in this context?

Afidah: The finance minister.

Suhaimi: Who was the finance minister then?

Afidah: Datuk Seri Najib Abdul Razak.

The Finance Ministry official also testified that Najib had signed a memorandum for a government guarantee for SRC International to get a further RM2 billion loan from KWAP in 2012, after a RM2 billion loan obtained a year earlier also from the pension fund.

The Finance Ministry’s Strategic Investment Department deputy secretary Afidah Azwa Abdul Aziz is pictured at the Kuala Lumpur High Court Complex June 19, 2019. — Picture by Firdaus Latif
The Finance Ministry’s Strategic Investment Department deputy secretary Afidah Azwa Abdul Aziz is pictured at the Kuala Lumpur High Court Complex June 19, 2019. — Picture by Firdaus Latif

Afidah pointed out that it is not usual practice for a government guarantee letter to be signed by the finance minister as it is usually only taken up to the level of the second finance minister for approval.

She explained that an internal memorandum for the government guarantee to be presented to Cabinet for consideration was prepared on February 2, 2012 — the same day SRC International chief executive Nik Faisal Ariff Kamil came to the ministry to discuss details of the second guarantee.

The draft of the memo then went through several layers of approvals on the same day – including then-second finance minister Datuk Seri Mohd Husni Hanadzlah — before it was taken to Najib, who signed it on February 3, 2012.

“Usually the Finance Ministry’s procedure requires approval from the second finance minister only. But for this memorandum, I was ordered to take the memorandum for approval and signature of the finance minister.

“However, I was not informed why I needed to do that,” she said.

During cross-examination, Najib’s lawyer Harvinderjit Singh asked Afidah to clarify which of the two finance ministers had really signed off on the memorandum for the second guarantee.

“There is the first finance minister which was Datuk Seri [Najib] and Datuk Seri Ahmad Husni Hanadzlah was the second finance minister, so are you sure it was not the second minister?” Harvinderjit asked.

In response, Afidah said the Loans Guarantee (Bodies Corporate) Act stipulated that it is the finance minister.

During the course of the trial, witnesses have testified that KWAP granted a total of RM4 billion in loans in August 2011 and March 2012 to SRC International, with money allegedly flowing through other companies before being transferred into Najib’s accounts.

Najib, who is still Pekan MP, is being tried with abusing his position, criminal breach of trust and money-laundering over RM42 million of SRC International’s funds.