More revelations of KWAP’s RM4b loan to SRC

It was testified that Najib had asked KWAP to expedite the 1st RM2b loan request in 2011 before SRC asked for an additional RM2b facility in 2012

by RAHIMI YUNUS / pic by HUSSEIN SHAHARUDDIN

EVEN the best Hollywood script writers could have not penned a better mystery.

Retirement Fund Inc’s (KWAP) RM4 billion loan approval to SRC International Sdn Bhd is expected to continue to be the focal point in former Prime Minister (PM) Datuk Seri Mohd Najib Razak’s ongoing trial this week.

On Day 16 of the trial, KWAP’s legal and secretarial department VP Azlida Mazni Arshad testified that Najib had asked the pension fund to expedite the first RM2 billion loan request in 2011.

A few months later in 2012 the former subsidiary of 1Malaysia Development Bhd (1MDB) asked for an additional RM2 billion facility. KWAP approved the request.

The testimony from the prosecution’s 35th witness was consistent with facts established from former KWAP assistant VP Amirul Imran Ahmat (picture), who testified that he was instructed by the management to expedite the application.

This week, the defence is expected to cross-examine Azlida Mazni on the approval process. The questioning would divulge the nitty-gritty of the decision-making process at the fund, who were the members of the investment panel, the top management’s roles and if any, Najib’s role.

The eldest son of the country’s second PM is accused of committing seven offences of criminal breach of trust, money laundering and power abuse involving RM42 million allegedly misappropriated from SRC. SRC was placed under the Ministry of Finance (MoF) Inc.

Azlida Mazni had testified that Najib had informed former KWAP chairman Tan Sri Wan Abdul Aziz to speed up the approval process of the first RM2 billion credit facility, as informed by the pension fund’s former CEO Datuk Azian Mohd Noh in an investment panel meeting on July 18, 2011.

In that meeting, Azlida Mazni said KWAP’s fixed-loan department presented the investment proposal with stricter terms and conditions, including to have a Malaysian government guarantee — a corporate guarantee — from 1MDB and a letter of comfort/ awareness from the MoF.

The fixed-loan department also proposed additional terms of no change of ownership for SRC and the former 1MDB’s subsidiary to be placed under the MoF Inc.

Azlida Mazni said the investment panel viewed that, among others, the RM2 billion loan proposal was too large for a company with a paid-up capital of RM2.

The committee had initially approved a RM1 billion loan proposal out of a RM3.95 billion loan first requested by SRC — via a mere two-page application letter absent of details.

“The investment panel had questioned the capability and credibility of SRC’s management team to venture into natural resources industry that requires high skills,” Azlida Mazni said during the trial last week.

Additionally, she said the investment panel was aware of the risks associated with the proposed investment for KWAP, particularly on risk of payment, “over-concentration”, country and industry.

The prosecution’s 35th witness also testified that Nik Faisal Ariff Kamil, an acting SRC CEO at the material time, requested that the RM2 billion loan to be disbursed in one lump sum instead of through a progress payment on justifications that the company was a subsidiary of 1MDB, and the loan was backed by a government guarantee.

She said six investment panel committee members which included the KWAP chairman, the investment panel chairman Datuk Mohd Azlan Hashim and former Minister in the Prime Minister’s Department Tan Sri Abdul Wahid Omar, approved the RM2 billion facility with exemptions of Paragraphs Two and Five under the pension fund’s guidelines.

At an earlier proceedings with Amirul Imran, the prosecution’s 29th witness, stood his ground that there was indeed a breach of the guidelines, though the defence suggested otherwise.

“There was a breach, hence, the need for waivers,” he said, prompting defence attorney Harvinderjit Singh to respond saying, “There were waivers, hence no breach.”

Amirul Imran said he tried to derail a RM2 billion loan request made to KWAP by jacking up the interest rate, in hoping for SRC to withdraw the request.

He also said the promised government guarantee was the “only selling point” of the investment and set to mitigate any risk to payments of the loan.

KWAP issued the first RM2 billion offer letter to SRC on Aug 23, 2011, and the second series was on March 23, 2012, the court was told.

Witnesses from KWAP — Azlida Mazni, Amirul Imran, former KWAP’s investment settlement department VP Amirah Muhamad Nor and Ambalagam R Marappan who once served as the director of accounts and management services department — had testified that the total RM4 billion loaned to SRC was one of the biggest facilities it had ever approved.

Meanwhile, a witness from Bank Negara Malaysia (BNM), testified that reporting institutions such as banks do not need to alert an account owner, if they find suspicious transactions in a specific account, in disagreement with the defence’s argument that Najib should have been alerted of dubious transactions in his account.

Ahmad Farhan Sharifuddin, a manager at BNM said such alerts are not allowed to avoid tipping off, as provided under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001. The trial will continue tomorrow.