Najib explains second RM2 billion loan for SRC

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

KUALA LUMPUR: Former prime minister Najib Razak told the High Court in his SRC International trial today that he was informed that the company wanted another RM2 billion loan as it did not have enough money to support its operations.

He said he was told that SRC International had set aside the first RM2 billion from the Retirement Fund Incorporated (KWAP) for “investment purposes”.

“The second loan was needed because SRC International was carrying out activities in line with the national energy policy, and to reduce the country’s reliance on the oil and gas industry,” he said.

The court previously heard that KWAP had lent SRC International RM2 billion in August 2011 and another RM2 billion in February 2012. Both loans were guaranteed by the government.

When questioned by Attorney-General Tommy Thomas on whether, as finance minister, he had asked the company why it needed another RM2 billion, Najib said SRC International received the first tranche after about seven months.

“They said they had immediate plans for investment purposes. I did not ask further questions,” he said, adding that he had signed the second government guarantee as Ahmad Husni Hanadzlah, the second finance minister at the time, had not been around.

Husni had signed the first government guarantee in August 2011.

Thomas asked if Najib had “acted wrongly” in signing the second guarantee without checking what had happened to the first round of funds. However, Najib said he did not agree.

When asked if the first RM2 billion could have been misspent, Najib said he was not informed of such matters by the company directors.

“I assumed the board should do it. It was their fiduciary duty,” he added.

He also disagreed with the testimony of Treasury officer Afidah Azwa Abdul Aziz, who said SRC International was the “prime minister’s company” and that she was pressured to rush the relevant paperwork so that the Cabinet could make a decision on the second government guarantee.

“There is nothing to say that I owned the company,” he said.

He also said he only realised “much later” that RM1.8 billion from the company’s bank account was transferred to Falcon Private Bank and Julius Baer Group AG in Hong Kong.

“It was not my decision to park the money there,” he said.

The hearing continues before High Court judge Mohd Nazlan Mohd Ghazali.

Najib face 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 KWAP.