KUALA LUMPUR: Putrajaya had to rescue SRC International Sdn Bhd by approving a RM642 million loan when the company could not pay its debt to the pensioners fund, the High Court in Najib Razak’s corruption and abuse of power trial heard today.
Finance ministry official Afidah Azwa Abdul Aziz said if the money was not approved, the government which stood guarantor for the RM4 billion loan taken from KWAP must settle the principle amount within 30 days in the event of a default.
“KWAP could terminate the loan agreements and recall the full debts from the guarantor,” Afidah, the 41st witness, said when examined by deputy public prosecutor Suhaimi Ibrahim.
She said KWAP sent a letter to SRC International in August 2015 when it defaulted on the interest payment for the first loan of RM2 billion approved in 2011, and another letter in September that year for another default on the second RM2 billion loan given in 2012.
She said SRC International resorted to government help to obtain a short-term loan of RM92 million in December 2015, to settle the interest payment for the first loan.
SRC International again depended on the government to settle the interest payment of RM250 million for the second loan, she added.
“The government provided a standby credit for RM250 million in July 2016,” she said.
However, she said SRC International only utilised RM213 million of the standby credit.
In 2017, she said, SRC International made another application to the government to secure RM300 million as it failed to pay the interest and principle amount for the RM4 billion loan.
She said all three loans approved by the government were paid directly to KWAP.
Afidah said the government usually paid the loans for which it stood as guarantor, especially when it involved infrastructure projects which could not generate revenue while under construction.
“However, SRC took the RM4 billion loan for investment purposes and should have obtained profits from its ventures,” she said.
In SRC International’s case, she said, the government was ill-prepared as the company informed the treasury too late that it could not pay its debt to KWAP.
She said the government is still servicing SRC International’s debt to KWAP, and that its obligation will only end in 2022.
“The interest and principle sum that the government had to bear as of May this year was RM4.15 billion,” she added.
Najib, 66, is facing three charges of criminal breach of trust, one charge of abusing his position and three counts of money laundering over SRC International funds amounting to RM42 million.
He is also accused of abusing his power as prime minister by giving government guarantees on SRC International’s RM4 billion loan from KWAP.
The Pekan MP was charged with committing the offences at AmIslamic Bank Bhd in Jalan Raja Chulan and the Prime Minister’s Office in Putrajaya between Aug 17, 2011, and Feb 10, 2015.
The hearing continues before judge Mohd Nazlan Mohd Ghazali.