KUALA LUMPUR, Dec 11 ― SRC International Sdn Bhd urgently needed a RM2 billion loan in 2011 for the company to strategically operate in the name of national interest, Datuk Seri Najib Razak told the High Court today.
Under cross-examination by Attorney General Tan Sri Tommy Thomas, Najib said funding the firm was of strategic importance to the country, when he was asked why the government guarantee (GG) was issued for the loan in August 2011.
“SRC was formed because there was a need from a strategic point of view for the country and this was supported by the Economic Planning Unit (EPU) because they have said there were investment opportunities so the financial needs of SRC needed to be expedited.
“That is why this was done and I want to say this was not something unusual on the needs of the new company that was done in a short time,” he told the High Court in his RM42 million SRC International corruption trial.
When pressed, Najib claimed it was not unusual for Cabinet papers to be prepared in a short time despite admitting previously that the process was expedited under his order.
Later Najib disagreed with Thomas's suggestion that the loan application was approved in a Cabinet meeting due to his personal involvement as the prime minister and finance minister, adding that it was approved because SRC International “had asked for it”.
Earlier, Najib said he was not aware that SRC International ― as the intended borrower ― had not submitted a formal loan application for its first RM2 billion loan.
Thomas then pointed out to Najib that it was a known fact SRC International was not supported by an intended borrower's written application for both its RM4 billion loan from KWAP and was not an arm's length transaction as the GG necessitated the granting of the loans.
Thomas: You agree that the most fundamental aspect of a GG is that it places a tripartite relationship on what was going to be bilateral relationship between lender and borrower. That is the essence of a guarantee, you understand? Do you?
Najib: I understand.
Thomas: If that is the case, I suggest to Datuk Seri the reason it was not an arm's length transaction because everyone was aware the GG was going to come. Everybody in this transaction was aware that Datuk Seri as PM and Finance Minister would ensure the GG would be received.
Najib: Well yes because SRC needed to function as a company as there were specific requirements for the sake of national interest.
Najib said he “totally disagreed” with the suggestion he was “hopelessly” in conflict of interest in the granting of GG to SRC International as he did not recused himself from the Cabinet meeting on August 17, 2011 as suggested by Thomas.
Justifying his actions to not recuse himself, Najib said he was confident there was no conflict of interest when he chaired the Cabinet meeting.
On expediting SRC's RM2b loan guarantee since it's “PM company”
Najib also disagreed to a suggestion by Thomas on the characterisation of former ministry employees' towards SRC International being the “prime minister's company”.
Previously, the prosecution’s 41st witness Afidah Azwa Abdul Aziz testified that she was informed by her superior to expedite the preparation of an internal memo over the granting of the first government guarantee for SRC International's first RM2 billion loan from the Retirement Fund Incorporated (KWAP) as it was the “PM's company.”
Thomas: As far as she was concerned, SRC was the PM's company.
Najib: Yes I remember, but I disagree.
Thomas: But I put it to you that's how she and her colleagues saw SRC.
Najib: I disagree with that.
Afidah — the strategic investment department deputy secretary in the Finance Ministry — had testified that she was instructed to prepare the internal memo and a Cabinet memorandum on the same day to be included for the Cabinet’s consideration on August 15, 2011.
Najib is on trial over seven charges related to SRC International.
Three are for criminal breach of trust over a total RM42 million of SRC International funds while entrusted with its control as the prime minister and finance minister then, three more are for laundering the RM42 million, and the last is for abusing the same positions for self-gratification of the same sum.