Cabinet approved guarantee letter at lightning speed for SRC to get RM2 bil loan, court told

Former prime minister Najib Razak at the Kuala Lumpur High Court today.

KUALA LUMPUR: A government guarantee for the pensioners’ retirement fund (KWAP) to approve a RM2 billion loan in 2011 to SRC International Sdn Bhd was given within 48 hours, Najib Razak’s corruption and abuse of power trial heard today.

Finance ministry official Afidah Azwa Abdul Aziz told the High Court this was unusual as an applicant was required to submit detailed information for the Cabinet’s consideration.

“In order to rush, I had to merely rely on the information from SRC representatives,” Afidah said when examined by deputy public prosecutor Suhaimi.

Afidah said the ministry would usually call an applicant to obtain details such as the reason for the loan, the type of loan it intended to secure and cash flow of the company after receiving its application (to obtain a government guarantee).

“If my memory serves me right, SRC representatives came to the ministry on Aug 15, 2011, which was a Monday,” she said.

She said she prepared a memorandum on the same day for the Cabinet division so that it could be circulated to ministers before their meeting.

Afidah said SRC ‘s application was tabled and approved by the Cabinet on Aug 17, 2011.

A guarantee letter dated Aug 26, 2011 was signed by former second finance minister Ahmad Husni Hanadzlah.

Former deputy chief secretary (Cabinet division) Mazidah Abdul Majid testified yesterday that Najib chaired the meeting and did not leave the room over any possible conflict of interest concern.

Najib faces six charges of money laundering and criminal breach of trust in the transfer of RM42 million to his account from SRC International, a former unit of 1MDB.

He is also accused of abusing his power as prime minister by giving government guarantees on SRC International’s RM4 billion loan from Retirement Fund Inc.

The Pekan MP was charged with committing the offences at AmIslamic Bank Bhd on Jalan Raja Chulan and the Prime Minister’s Office in Putrajaya between Aug 17, 2011, and Feb 10, 2015.

Afidah said the former prime minister signed a memorandum to issue a second government guarantee for SRC International to get another RM2 billion loan in 2012.

She said this government guarantee was given despite the fact that SRC International had obtained a RM2 billion a year earlier after the government guaranteed that loan.

Responding to deputy public prosecutor Suhaimi’s question, Afidah said Najib had signed the second guarantee letter.

Asked by Suhaimi about restrictions against Ministry of Finance Incorporated (MoF Inc) companies obtaining a second loan, she said the finance minister could give his approval if a company sought a second guarantee.

“This is stated in the Loans Guarantee (Bodies Corporate) Act. And Najib was the finance minister at that time,” she said.

However, Afidah added that when the second government guarantee was given to SRC International on Feb 8, 2012, it was not yet under MoF Inc.

“I only knew that SRC would be placed under MoF Inc through a Jan 9, 2012 letter signed and sent by the company’s CEO Nik Faisal Ariff Kamil to the finance minister.

“In the memorandum to the Cabinet, it was said SRC would be fully under MoF Inc by Feb 17, 2012,” she said.

She also said Nik Faisal went to the finance ministry on Feb 2, 2012 to meet her and her department’s secretary, Maliami Hamid, to discuss the need for a second government guarantee.

Afidah said she was told to prepare an internal memo on the same day as Cabinet members had to consider the second government guarantee.

She said after SRC International was made an MoF Inc company, it reported directly to Najib.

Najib’s lawyer Harvinderjit Singh then asked Afidah who had actually signed the memorandum for the second guarantee, pointing out that there were two finance ministers during that time.

“There is the first finance minister which was Datuk Seri and Ahmad Husni Hanadzlah was the second finance minister, so are you sure it was not the second minister?”

Afidah replied that the Loans Guarantee (Bodies Corporate) Act said it had to be signed by the finance minister.

Fiat prosecutor V Sithambaran interjected to tell the court there was no “first finance minister” under the law.

“The witness has clearly said it was the finance minister,” he added.

The hearing continues before High Court judge Nazlan Ghazali.