OFFICERS at the Retirement Fund Inc (KWAP) were issued neither a direct order by Najib Razak to approve RM4 billion in loans to SRC International nor were required to approve loans they found untenable, the Kuala Lumpur High Court heard last week.

In fact, the officers were empowered to reject loan applications outright if they violated KWAP’s investment policy and guidelines or, at the very least, recommend to their superiors that the loans not be approved.

Azlida Mazni Arshad, vice-president of KWAP’s legal and secretarial department, told the court that KWAP’s investment panel – which included the group’s chairman, Wan Aziz Wan Abdullah – was not legally bound to carry out instructions from the prime minister or cabinet members regarding approval of loans under its purview. 

Najib’s trial revolves the RM4 billion in loans, made out in August 29, 2011 and March 28, 2012, to SRC International. Of that amount, RM42 million eventually made its way into the former prime minister’s personal bank accounts in 2014 and 2015, over which he faces seven criminal charges.

On Najib’s earlier involvement in the approval of the first RM2 billion loan, Azlida had previously told the court that an investment panel meeting was informed by KWAP CEO Azian Mohd Noor on July 19, 2011 that Najib wanted to expedite the approval process.

Azlida told the court last week, however, that no records showed the loan was approved merely on instruction by Najib, who was also finance minister at the time.

When cross-examined by the defence, Azlida conceded that such an instruction to the panel would have been recorded in the minutes of the meeting.

She was also referred to a letter on SRC International’s application for a RM3.95 billion loan – which was later reduced to RM2 billion – that Najib had signed and endorsed with “Agree with this proposal”. She told the court that the handwritten note did not amount to an instruction.

Azlida agreed with the defence’s suggestion that the investment panel approved the first RM2 billion loan only after a government guarantee letter dated August 26, 2011 was produced. That letter was signed by former second finance minister Ahmad Husni Hanadzlah.

She also testified that a government guarantee letter for the second loan of RM2 billion in 2012, signed by Najib, did not amount to a directive to KWAP to approve its second RM2 billion loan to SRC International.  

When pressed, Azlida agreed that for both RM2 billion loans, the investment panel could not be forced to approve them. 

She also agreed that officers could put a stop to questionable investments or raise the matter with their superiors if they did not believe a venture would be profitable.  

‘CSR’ transactions

Two witnesses from SRC International’s corporate social responsibility (CSR) arm also testified that RM42 million transferred to Najib’s personal accounts from Ihsan Perdana Sdn Bhd in 2014 and 2015 were originally intended for corporate social responsibility (CSR) purposes.

Accounts manager Aishah Ghazali, a former senior accounts executive at Ihsan Perdana, confirmed that SRC International’s CSR unit received RM50 million between 2014 and 2015.

She testified that in those years, several transactions amounting to RM42 million were made within days of receiving the money to two AmBank private accounts, numbered 211-202-201190-6 and 211-202-201188-0.

These account numbers were identified by a previous witness as belonging to Najib.

Aishah further testified that she never discovered the identity of the account holder, despite repeated instructions to verify this with Affin Bank, which held Ihsan Perdana’s three accounts.

Those instructions came from managing director Dr Shamsul Anwar Sulaiman, who also told the court that he did not know Najib was the recipient of the RM42 million.

He said that, had he known it was Najib, he would not have approved the transfers to those accounts in December 2014 and February 2015. Dr Shamsul said he also asked Ihsan Perdana financial director Abdul Aziz Ismail who owned the account, to which the latter stated he also did not know. 

Dr Shamsul said he did not know where the money originated from. Aishah testified earlier that the money came from Gandingan Mentari, a subsidiary of SRC International. 

Dr Shamsul said he then met with Dennis See Thuan Buan, who was project director at Yayasan Rakyat 1Malaysia (YR1M), for which Ihsan Perdana also carries out CSR work. See told him that the company account would be used as a “transit” stop for RM40 million on December 24, 2014.

“I asked for further details from (See) but he did not give any further explanation and refused to provide the details that I wanted,” Dr Shamsul said. 

He said he made a bank transfer to Najib’s AmBank account ending in 880 for RM27 million two days later, on December 26, 2014.

“I made the payment into the (Najib’s) account even though I was not sure of the true purpose because I was following instructions from (YR1M CEO) Ung Su Ling and (See),” Dr Shamsul said, adding that Najib had never contacted him regarding the RM27 million transfer. 

The court previously heard that some RM7.2 million was remitted from Najib’s personal bank accounts in early 2015 to 14 recipients, which included construction, home renovation and plumbing companies; Umno political operatives in Johor, Selangor and Penang; Sabahan Barisan Nasional political party Upko; and, a pro-BN online news portal.

Najib, 66, faces three counts of criminal breach of trust, three counts of money laundering and one count of abuse of power. He faces up to 20 years’ imprisonment if convicted. 

The former Umno president is represented by a dozen lawyers led by Muhammad Shafee Abdullah. 

Attorney-General Tommy Thomas leads the prosecution, while Justice Mohd Nazlan Mohd Ghazali presides over the trial, which will resume on May 28. – May 19, 2019.