KUALA LUMPUR, July 1 — As we enter Day 30 of Datuk Seri Najib Razak’s criminal trial today after a week’s break, have you lost track of all the goings-on in court or are just simply overwhelmed by the overload of information?
If you answered yes to both, Malay Mail is here with a condensed summary of what has taken place so far.
In case you missed our first recap on what took place from Days 1 to 17, fret not as you can just go here.
Now that you are prepared, let’s proceed with this simplified recap and highlights of what the prosecution witnesses (PW) and multiple documents revealed from Day 18 until Day 29 of the trial:
How some of SRC International’s RM4 billion funds were funnelled into Najib’s account
In brief, SRC International was initially owned by controversial state investment firm 1Malaysia Development Berhad (1MDB) before it was put under the sole ownership of the Finance Ministry's Minister of Finance (MoF) Inc.
After SRC International obtained loans totalling RM4 billion (in two separate tranches of RM2 billion each) from the Retirement Fund Incorporated (KWAP) in August 2011 and February 2012, some RM42 million made its way into Najib’s accounts according to bank documents shown in court previously.
To be exact, a total of RM85 million flowed out from SRC International's AmIslamic Bank account-650 (where the second RM2 billion loan was transferred from KWAP) a few years later to SRC International's subsidiary Gandingan Mentari Sdn Bhd's AmIslamic Bank account.
Bank documents also showed Gandingan Mentari transferred a total of RM50 million to SRC International's purported corporate social responsibility partner Ihsan Perdana Sdn Bhd's (IPSB) Affin Bank account.
PW36 Aishah Ghazali, who was Ihsan Perdana senior account executive, testified that three fund transfers totalling RM42 million from IPSB into Najib’s personal bank accounts between December 2014 and February 2015 were recorded as “funds for CSR programmes.”
The cash was transferred in three tranches of RM27 million and RM5 million on December 26, 2014 and RM10 million on February 10, 2015 into two AmPrivate Banking-MY accounts belonging to Najib (2112022011-880 and 2112022011-906).
According to Aishah, these transfers were authorised by her former boss and PW37 Datuk Dr Shamsul Anwar Sulaiman who was managing director of IPSB.
Dr Shamsul in confirming the fund transfers to the accounts that he had not known then belonged to Najib, said he was instructed to do so by Yayasan Rakyat 1Malaysia (YR1M) officials after millions of ringgit entered IPSB’s account from September 2014 to April 2015 from sources that he did not know.
During the trial, Dr Shamsul named two individuals — YR1M project director Dennis See and YR1M official Ung Su Ling — as the people who had asked to “borrow” IPSB’s account for the purpose of transferring funds to accounts belonging to Najib.
In what was probably one of the most bizarre statements made during the trial, Dr Shamsul claimed Najib was allegedly genuinely “shocked” and upset after finding out someone had transferred RM42 million into his personal accounts through IPSB purportedly without his knowledge.
His remark subsequently spawned a nationwide meme with people poking fun at the Najib’s purported response.
Government guarantees for SRC International RM2b loans ‘expedited’?
Perhaps one of the most shocking or memorable highlights of the trial was the first mention of SRC International as the “prime minister’s company” by one of the witnesses.
Prompting an immediate objection from the defence and sparking an argument between the prosecution, Finance Ministry’s Strategic Investment Department deputy secretary Afidah Azwa Abdul Aziz made the startling remark when she was asked to clarify her witness statement during re-examination.
Afidah, who asserted she was under duress and told to expedite the loan application by her superior, was also responsible for the preparation of the internal memo and a Cabinet memorandum over SRC International’s government guarantee over its initial RM2 billion loan in 2011.
Another witness also testified that KWAP had released the second RM2 billion loan to SRC International in 2012 even before the actual letter of government guarantee arrived, due to the Finance Ministry’s assurance.
Was KWAP compelled or influenced to grant SRC International’s initial RM2b loan?
During the trial, KWAP’s former chief executive Datuk Azian Mohd Noh testified how she was given a handwritten note of approval by Najib himself through his former special officer Datuk Azlin Alias in June 2011.
KWAP officials had previously confirmed the existence and purpose of this letter, but Azian further revealed in court that she received the note during a meeting with Azlin at the lobby of a hotel in KL Sentral, Kuala Lumpur after office hours.
Azian added that the letter carrying Najib's handwritten note of approval was a letter signed off by SRC International director Nik Faisal Ariff Kamil, with the letter addressed to Najib to seek his approval for the company to apply for a RM3.95 billion loan from KWAP.
KWAP’s Fixed Income Department later prepared an investment paper to propose KWAP consider lending only RM1 billion instead of the RM3.95 billion sought by SRC International.
After a protracted process that involved a third internal proposal, KWAP finally agreed to give a RM2 billion loan in late August 2011 to SRC International after securing a government guarantee for the loan, with the government guarantee letter signed by the then Finance Minister II Datuk Seri Ahmad Husni Hanadzlah.
However, Azian conceded that she could not rule out being influenced by the note from Najib who was her superior when it came to the approval of the loan, despite there being no legal compulsion to do so.
Witnesses previously testified that KWAP in 2012 gave a second RM2 billion loan to SRC International, again due to a government guarantee letter that was this time signed by Najib.
Cabinet knew of SRC International and its inability to repay KWAP’s debt
In 2015, cracks began to show in SRC International after the company failed to service its debt to KWAP, with the pension fund submitting two letters requesting outstanding payments over the first and second loan to be made immediately.
Former deputy Chief Secretary to the government Tan Sri Mazidah Abdul Majid testified that Najib and his Cabinet then approved a RM100 million loan in 2015 proposed by the Finance Ministry (MOF) to avoid KWAP declaring an Event of Default (EOD) which would have immediately terminated funding to SRC International.
Should an EOD be declared, KWAP as the borrower can terminate the loan agreement and is given the right to reclaim the full loan amount or amount guaranteed from the government who was SRC International’s guarantor.
One witness testified that this bailout was the first of three short-term loans totalling RM642 million (RM92 million, RM250 million and RM300 million) approved by Najib and/or his Cabinet between November 2015 and December 2017 to pay off accumulated interests and late payment penalties.
SRC International’s inability to service the debt to KWAP was due to the freezing of their overseas accounts in Switzerland, according to PW41 and Finance Ministry official Afidah Azwa.
Moreover, during the time Najib sought the Cabinet’s approval over the granting of government guarantees on the SRC International loan applications between 2011 and 2012, he had declared to them he had no vested interest whatsoever in the deal.
All these instances (two government guarantees and the RM92 million short-term loan) recorded and substantiated in the minutes of the Cabinet meetings which took place also revealed that the ministers present did not raise any formal discussions or objections.
SRC International’s outstanding debt and the government’s responsibility
The company’s outstanding debt to KWAP stood at RM4.15 billion as of May 2019 which constituted the remaining principal payment including outstanding interests.
Presently the federal government as a guarantor must continue to pay on behalf of SRC International until the loan repayment period expires — 10 years from the date it was given out — in 2022.
What is even more shocking is that SRC International had already begun to accumulate outstanding interest payments as early as March 2015 and has neither made repayments to KWAP nor of the RM642 million bailouts according to the Finance Ministry’s current records.
Najib, Nik Faisal and SRC International’s relationship
Najib had added a clause in the constitution of SRC International — by appointing himself advisor emeritus — which indirectly gave him control of the company as he had the final say in all major company decisions despite there being a board of directors and shareholders.
At that time, Najib was both prime minister and finance minister.
Due to Najib’s standing as advisor emeritus, all board decisions had to be referred to him for his advice and consent despite Najib not having attended a single board meeting.
During the trial, Najib’s lawyer questioned the honesty of SRC International chief executive Nik Faisal — who was alleged to be the sole link between Najib and the board — was also shown to be “dishonest” in his conduct.
Throughout the seven days of cross-examination of former SRC International board chairman and director Tan Sri Ismee Ismail, the court was told of Nik Faisal’s actions that were suggested by Najib’s lawyer to be “dishonest”, ranging from his colluding with former director Datuk Suboh Md Yassin concerning a 2014 transaction of RM140 million meant to be invested in South America which was not presented to the rest of the board.
Nik Faisal also failed to inform the directors of his firm and its parent, 1MDB, when he applied for a RM3.95 billion loan from KWAP in 2011 and subsequently moved the RM2 billion loan obtained from KWAP into a bank account not known to the board.
Yet Nik Faisal managed to convince board members the company was being governed well under his stewardship, despite it appearing to be otherwise based on court testimonies so far.
All of the alleged “dishonesty” and lack of transparency eventually led to Ismee’s resignation after he took it upon himself to get the company’s account audited despite being told by Nik Faisal it had already been done.
To date, a total of 42 witnesses have been called, with the prosecution expecting to call another 25 more witnesses according to Attorney General Tommy Thomas.
Today, former SRC International director Datuk Suboh Md Yassin is expected to continue testifying as the 42nd prosecution witness.
The trial before High Court judge Mohd Nazlan Mohd Ghazali is expected to go on until July 3, before resuming on July 8 until August 15.