Witness in Najib trial says SRC International didn’t pay loan interest owed KWAP as Swiss account frozen

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

KUALA LUMPUR, June 19 — SRC International Sdn Bhd was unable to repay its outstanding RM4 billion loan to the Retirement Fund Incorporated (KWAP) beginning March 2015 because its overseas bank account in Switzerland had been frozen, the High Court heard today.

Afidah Azwa Abdul Aziz who is the strategic investment department deputy secretary in the Ministry of Finance (MoF) testified that SRC International had been making regular interest payments to KWAP but stopped around March 2015.

“A meeting between KWAP, the Finance Ministry and SRC International chaired by the Treasury secretary-general Tan Sri Mohd Irwan Serigar was then held in September 2015 over the matter.

“In the meeting, MoF was informed that SRC International had failed to settle its debt as it’s bank account had been frozen,” she said at the trial of former prime minister Datuk Seri Najib Razak who is charged with abusing his position, criminal breach of trust and money-laundering over RM42 million of SRC International’s funds.

Afidah Azwa said several letters instructing the company to explain its financial status and its account in Switzerland were subsequently sent, but no information or documents were given in return. 

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

She explained that under SRC International’s agreement with KWAP, the government — as the loan guarantor — must settle the full loan amount of RM4 billion and any outstanding interests to KWAP within 30 days after EOD is declared.

“KWAP wrote a letter dated August 28, 2015 to the company to request payments over outstanding interest for the first loan of RM2 billion be made as soon as possible or an Event of Default will be declared as stipulated in the loan agreement.

“Around the end of September 2015, KWAP once again wrote a letter to SRC International to request payments over outstanding interest for the second loan amount of RM2 billion be made as soon as possible or an EOD will be declared as stipulated in the loan agreement,” she said.

She said SRC International’s outstanding interest payment was at RM100.8 million in September 2015.

In her testimony, she also said that in order to avoid an EOD, SRC International sought the assistance of the Finance Ministry and the government, which then approved three government loans between 2015 and 2017 totalling RM642 million for the purpose of settling the company’s outstanding loan interest to KWAP.

Earlier she testified that SRC International’s outstanding debt to KWAP stood at RM4.15 billion as of May 2019, which the federal government has to pay in full.

The loan repayment period will last until 2022, 10 years from the date it was given out based on the loan agreement between KWAP and SRC International.

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.

Afidah Azwa is the prosecution’s 41st witness.

The hearing before High Court judge Mohd Nazlan Mohd Ghazali resumes at 9am tomorrow.