THE government is pursuing civil action to recover about RM4 billion of funds borrowed by 1Malaysia Development Bhd’s subsidiary SRC International Sdn Bhd, said Finance Minister Lim Guan Eng.

He said steps are being taken to recover some RM3.6 billion, which were taken by BSI Bank in Switzerland (over US$800 million), Bank Julius Baer & Co Ltd in Hong Kong (US$250 million) and a coal exploration firm in Mongolia (US$60 million).

SRC International had borrowed RM4 billion from public pension fund Kumpulan Wang Amanah Persaraan (KWAP) under federal government guarantee.

“Considering a huge sum of the fund was used across the world, the government is taking steps to recover the RM4 billion fund,” he said in a statement today.

He said the Finance Ministry has taken over all of SRC International’s affairs in 2012, with the federal government taking full responsibilities of its financial problems.

“The government via SRC International is now actively taking civil action for the purpose of recovering these funds and also working with the authorities to track down the money, aside from working with law advisers to determine the kind of civil action can be taken to recover SRC assets.

“These measures do not include part of the RM42 million fund allegedly embezzled from SRC International and the subject of the seven criminal charges being tried at the Kuala Lumpur High Court,” he said. 

Lim said all funds returned to SRC International will be used to repay the KWAP loan and at the same time reduce the federal government’s financial burden to repay all of SRC International’s debts.

On Monday, Lim said the Finance Ministry has thus far paid RM1.69 billion as part of its obligation in servicing SRC International’s RM4 billion loan from KWAP.

The RM4 billion government-guaranteed loan facility was taken by SRC International from KWAP on August 26, 2011 and March 27, 2012, whereby the civil service pension fund had released RM2 billion on each date.

However, the company was unable to service its debt after being embroiled in a critical financial situation since 2015.

The latest payment amounting to RM344.68 million was made on August 29. Of this, RM300 million was the principal, whereas the interest amounted to RM44.68 million.

The next payment is scheduled for September 30, involving an interest of RM43.02 million. – September 4, 2019.