Najib admits SRC International had serious cashflow problem since 2015


FORMER Prime Minister (PM) Datuk Seri Mohd Najib Razak told the Kuala Lumpur High Court yesterday that SRC International Sdn Bhd suffered a serious cashflow problem since 2015.

The former SRC International advisor emeritus testified that a portion of SRC International funds, which were kept in a bank in Switzerland in 2012, had been frozen by the local authority.

On his fifth day on the witness stand, Najib said SRC International management had been instructed to determine the amount of the frozen funds in Falcon Private Bank and ultimately, to retrieve them.

Besides Switzerland, lead prosecutor Attorney General Tan Sri Tommy Thomas also questioned the need to park the US$600 million (RM2.5 billion) of SRC International funds at Bank Julius Baer & Co Ltd in Hong Kong.

Najib said he was not aware that SRC International funds had been kept at overseas banks, claiming they were operational matters and that he did not micromanage the company.

SRC International, a unit of 1Malaysia Development Bhd, raised RM4 billion capital via debt facilities that were provided by the Retirement Fund Inc (KWAP) — RM2 billion each in 2011 and 2012.

Former Second Finance Minister Datuk Seri Ahmad Husni Mohamad Hanadzlah previously testified that he wanted to go to Switzerland to resolve the matter, but Najib stopped him from doing so as efforts had already been taken by SRC International.

The trial also erupted into heated exchanges between Thomas and the former finance minister over the missing funds.

Thomas argued that Najib had done nothing to recover the frozen funds, but tried to contain the real facts of the alleged misappropriated monies. Najib, in response, asserted that it was SRC International management’s duties as it was operational matter.

Thomas: What steps had been taken by you to find out about the RM4 billion?

Najib: We instructed SRC (International) to take action and bring back the monies. The management was supposed to do it.

Thomas: Did you summon the directors and ask them what happened?

Najib: I did not summon them, but the Ministry of Finance Inc (MoF Inc) had instructed them to take efforts.

Thomas: I put it to you that you did nothing as far as SRC (International) is concerned.

Najib: Totally wrong. SRC (International) was supposed to do it. I am aware that SRC (International) had a serious cashflow problem. The MoF Inc wanted to find solutions over the frozen funds and bring them back to Malaysia.

Thomas: I put it to you that SRC (International) became insolvent?

Najib: I disagree.

Thomas: By the time you (were) ceased from being a PM in 2018, nothing (monies) came back. I put it to you that the RM4 billion has vanished and misspent.

Najib: I disagree. We could not determine the funds and I wanted to know.

Thomas also brought up the fact that the government had to provide three tranches of short-term loans to SRC International — RM100 million in 2015, RM250 million in 2016 and RM300 million in 2017 — to help the company service its interest payment with KWAP.

These were on top of the two government guarantees tied to the SRC International’s RM4 billion loans. On the first government guarantee, Thomas showed that it was approved before the SRC International’s first board meeting.

The first government guarantee was approved by the Cabinet on Aug 17, 2011, but the board held its inaugural meeting on Aug 23, 2011.

On that Aug 23 board meeting, Thomas said the language of the directors’ resolution was “we ‘accept’ the RM2 billion debt facility”, instead of “apply for the loan”.

Najib said the government needed to ensure SRC International had enough funds for it was envisioned to be a strategic company for the country in the energy sector and a Cabinet paper could be done in a short period of time.

He also said his power in SRC International was nothing unusual, drawing similarity with how a PM has his power in Petroliam Nasional Bhd. The trial continues next Wednesday.