Najib has room to avert bankruptcy

‘There are still ways for him to fight, appeal and buy time, especially in the Covid period,’ including dragging it until the next election

by RAHIMI YUNUS / pic by TMR FILE

DATUK Seri Mohd Najib Razak (picture) may still be able to buy time and ultimately avoid bankruptcy, despite failing to suspend the RM1.69 billion payment order of tax arrears and penalties owed to the Inland Revenue Board (IRB).

A senior counsel said there are still many legal processes before one could be declared bankrupt, while Najib could appeal the High Court’s decision to dismiss his bid for a stay of execution on the summary judgment.

“There are still ways for him to fight, appeal and buy time, especially in the Covid period.

“He may drag it until the next general election which must be held by 2023,” the senior counsel, speaking on condition of anonymity because the issue is legally sensitive, told The Malaysian Reserve (TMR).

The source said the former prime minister (PM) could exhaust all appeals available, including the latest High Court decision.

Najib’s lead defence counsel Tan Sri Muhammad Shafee Abdullah did not immediately reply to a request for comment by TMR on the defence’s next course of action.

Muhammad Shafee had previously said his client’s parliamentary seat and political career are at stake, if a bankruptcy action proceeds.

He had said Najib “will lose everything, his pension and his properties would be auctioned in order for all these to be executed. This will never be reversible”.

On Monday, the Kuala Lumpur High Court rejected Najib’s application to suspend the court judgement for the tax payments pending a court appeal and tax assessment at the Special Commissioners of Income Tax (SCIT), a special tribunal that handles tax appeals on the amount of tax assessed.

This means IRB could proceed with the bankruptcy proceeding against Najib.

Judge Ahmad Bache ruled that the former PM had no strong grounds for a stay to be granted as he had failed to prove special circumstances to the court.

He added that if a stay of execution for Najib is granted, the IRB would be stopped from filing any recovery actions against the Pekan MP, thus setting a bad precedent.

Lawyer Wan Azmir Wan Majid said to be and sustain as an MP requires a solvent individual and bankruptcy is the test for solvency.

He said Najib’s recourse, other than legal filings, would be to convince the IRB to concede to a stay in view of the unprecedented novelty of the matter.

On Feb 4, IRB had issued a bankruptcy notice against Najib as a debtor for failing to pay the RM1.69 billion in income tax arrears and penalties as ruled by the High Court in a summary judgement.

Following the bankruptcy notice, it could go two ways, either full settlement or acceptable proposal for a full settlement; or filing of bankruptcy petition, which will then be heard, according to information in the public domain.

The court will proceed to make a receiving order once the debt of the petitioning creditor, an act of bankruptcy and service of petition are proved to the satisfaction of the court.

As it was, Najib had filed an appeal with the court of appeal and the SCIT against the order to pay the tax and the assessed amount respectively.

Ahmad said during Monday’s ruling that if the defendant wins his appeal at the SCIT, any extra amount collected could be refunded and hence, there is no issue with the appeal before the SCIT being rendered nugatory.

The judge also said the defendant can still negotiate with the plaintiff for some payments to be made pending the disposal of the hearing at the SCIT, and more often than not, IRB subscribes to a payment scheme that is a “win-win” situation for both parties.