SRC took finance ministry loan to pay interest on RM4 bil KWAP loan, court told

Finance ministry officer Afidah Azwa Abdul Aziz.

KUALA LUMPUR: Najib Razak’s abuse of power trial heard today that SRC International Sdn Bhd applied for and received a loan from the government to settle interest on its RM4 billion loan from Retirement Fund (Incorporated) or KWAP.

Finance ministry officer Afidah Azwa Abdul Aziz also told the High Court that SRC International failed to provide details about its “frozen” Swiss bank account despite being asked several times.

Afidah said the company informed officers of the ministry and KWAP that its account in BSI Bank in Lugano, Switzerland, had been “frozen” but did not give details.

“Letters were sent to ask SRC for details about this frozen account but it did not respond.

“A meeting was held in September 2015 between ministry officers, KWAP and SRC officials, chaired by Irwan Serigar (then Treasury secretary-general).

“The meeting was called after KWAP sent SRC a letter dated Aug 28, 2015 asking the company to pay interest on its loan immediately or else KWAP would declare ‘event of default’ against it,” she said.

Afidah added that SRC was also told at the meeting to provide an explanation on the “frozen” account and its financial standing.

She said KWAP sent another letter to SRC in September, after the meeting, asking it to repay the loan. A copy of the letter was forwarded to the ministry.

“At the time the second letter was sent, the interest that SRC needed to pay was RM100.8 million for the RM4 billion loan from KWAP,” Afidah said.

SRC did not pay the RM100.8 million but instead asked the ministry for a short-term loan to settle the interest payment.

“MoF then agreed to give a RM92 million loan to it for the purpose of paying the overdue interest,” Afidah said.

She agreed with Najib’s lawyer Harvinderjit Singh that the government would have to bear a “lesser burden” over the company’s debt if SRC’s Swiss bank account had not been frozen.

Meanwhile, another lawyer, Farhan Read, questioned Afidah on issues such as the setting up of SRC International, ministry officials meeting KWAP on the RM4 billion loan and the bond issuing process.

Fiat prosecutor V Sithambaran interjected, saying Afidah’s knowledge was confined to preparing documents related to government guarantees for SRC.

Farhan then proceeded to ask her about the possibilities if KWAP were to have declared the “event of default” against SRC International.

Sithambaran again stood up and said Afidah was not in a position to answer such a question as it involved legal consequences.

Najib 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.

Hearing continues tomorrow.