Minister: Govt to pursue civil action to recover SRC’s loan

Of the RM4b borrowed, approximately RM3.6b was transferred through several offshore subsidiaries

by DASHVEENJIT KAUR/ pic by MUHD AMIN NAHARUL

THE government is pursuing a civil action to recover about RM4 billion borrowed by SRC International Sdn Bhd from the Retirement Fund Inc (KWAP).

Finance Minister Lim Guan Eng (picture) said the action is to trace the money and pay back some of SRC’s loans.

“In addition to that, the government is also working with legal advisors to determine what civil actions can be taken to recover SRC’s assets,” he said in a statement yesterday.

Lim said considering a large portion of the funds had been used across the world, the government is taking the necessary steps to repatriate as much of the RM4 billion as possible.

Of the RM4 billion borrowed, approximately RM3.6 billion (US$1.1 billion) was transferred through several offshore subsidiaries.

Among the firms involved were BSI Bank in Switzerland (over US$800 million), Bank of Julius Baer & Co Ltd in Hong Kong (US$250 million) and a coal exploration company in Mongolia (US$60 million).

The RM4 billion borrowed from KWAP came with the guarantee of the federal government. SRC, a former subsidiary of 1Malaysia Development Bhd, was taken over by the Finance Ministry (MoF) in 2012. “Therefore, its financial liabilities are now fully borne by the federal government,” Lim said.

The steps taken to return the money does not include the portion of SRC’s funds amounting to RM42 million — which was allegedly embezzled from the organisation — and is the subject of seven criminal charges currently on trial at the High Court in Kuala Lumpur.

“Whatever funds returned to SRC in this endeavour will be used to repay its loan from KWAP. At the same time, this will also reduce the government’s burden to pay back the said loan on SRC’s behalf, as well as to provide additional allocations for economic development and the people’s welfare,” he added.

On Monday, Lim said MoF paid nearly RM1.69 billion of SRC’s RM4.15 billion debts owing to KWAP, with the most recent payment of over RM344 million last month.

So far, MoF has repaid RM1.69 billion to KWAP in paring down the total debts.

From that amount, the latest payment made on Aug 29, 2019 was RM344.68 million — including principal of RM300 million and interests of RM44.68 million.

The next date of payment on Sept 30, 2019, will involve RM43.02 million for the interests, according to Lim.

He reiterated that while the government is struggling fiscally, it will still ensure there are enough funds to “honour the debt repayment to KWAP” — of which RM3.8 billion in outstanding amount is to be settled by 2022.

In July, the former senior partner of a law firm who acted on behalf of KWAP told the High Court that SRC may end up paying over RM9 billion, as a result of taking the RM4 billion loan in 2011 and 2012.

SRC, whose accounts were frozen in 2015, had defaulted on its loan payments in 2015, 2016 and 2017, and it had to obtain a loan from the government to prevent an event of default.