KUALA LUMPUR, June 19 — SRC International Sdn Bhd’s outstanding debt to the Retirement Fund Incorporated (KWAP) stands at RM4.15 billion as of May 2019 which the federal government has to pay in full, the High Court heard today.
Finance Ministry’s Strategic Investment Department deputy secretary Afidah Azwa Abdul Aziz said the amount constituted to the remaining principal payment including outstanding interests.
“Until now, the federal government continues to help pay the loan debts of SRC International to KWAP and payment will continue until the principal amount and existing interests is paid in full,” she said in her testimony here.
Afidah Azwa said 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.
Earlier in former prime minister Datuk Seri Najib Razak’s corruption trial, she testified that SRC International began to accumulate outstanding interest payments as early as March 2015, with KWAP sending letters to the company demanding it to make payment or risk triggering an Event of Default (EOD).
Once an EOD is declared, the federal government, which stood as a guarantor for SRC International, would have to clear the RM4 billion debt to KWAP along with the outstanding interest within 30 working days as stipulated in the loan agreement.
She said the government usually paid the loans for which it stood as guarantor, especially when it involved infrastructure projects that could not generate revenue while they were under construction.
“For other projects except SRC International, it is common for the Finance Ministry to prepare beforehand.
“However, SRC took the RM4 billion loan for investment purposes and should have obtained profits from its ventures,” she said.
In SRC International’s case, she said, the government was ill-prepared as the company informed the treasury too late that it was not capable of servicing its debt to KWAP.
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.
The RM642 million government loans were provided in three tranches of RM92 million in 2015, RM250 million in 2016 and RM300 million in 2017.
She also conceded that as far as she knew, SRC International has not repaid the RM642 million owed to the government.
Najib was the finance minister and prime minister during the time the RM642 million bailouts for SRC International were given.
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.
At the time of the first loan application, SRC International was the wholly-owned subsidiary of 1Malaysia Development Berhad (1MDB) which was owned by the Finance Ministry’s Minister of Finance Inc (MoF Inc); while SRC International was parked directly under MoF Inc by the time of the second loan application.