Cabinet issued guarantee for RM2 bil even before SRC applied for loan, court told

Ad-hoc prosecutor V Sithambaram.

KUALA LUMPUR: Najib Razak considered it normal for the Cabinet to approve a government guarantee even before SRC International made an application to borrow RM2 billion from the pensioners’ retirement fund (KWAP), the ex-prime minister’s corruption trial heard today.

Najib’s response came when ad-hoc prosecutor V Sithambaram suggested to him that it must be “extraordinary” to give approval even before the RM2 company had applied for the loan from the lender in 2012.

Sithambaram then remarked that Najib, who is under cross-examination, would have been more careful if it had been his own money.

However, Najib did not respond to this comment.

Sithambaram then told the court that SRC had applied for the first RM2 billion from KWAP in 2011 and that the government guarantee was issued only after the company made a loan application to the fund.

However, for the second RM2 billion, the Cabinet led by Najib approved the guarantee first and only later did SRC apply for the loan.

The money was borrowed to realise the government’s National Energy Policy and to especially invest in the coal industry.

Najib, who was adviser emeritus of SRC, agreed with Sithambaram that even after the loan was given, there was no business progress.

SRC was initially a wholly-owned subsidiary of 1MDB but in February 2012, it was placed under Ministry of Finance Incorporated (MoF Inc).

Najib said all MoF Inc companies came under the purview of then second finance minister Ahmad Husni Hanadzlah but in the case of SRC, Najib did not consult him.

“I am not required to. As the finance minister, I could override him,” he added.

Najib disagreed with a suggestion by Sithambaram that he kept Husni in the dark over 1MDB and SRC when it involved financial matters.

He said he was also not in a conflict of interest position when the Cabinet approved the government guarantee for the second loan in March 2012.

Najib dismissed Sithambaram’s suggestion that he had taken steps to assist SRC all the way because he had a personal interest and wanted to make the company his private concern.

However, he agreed with Sithambaram that SRC did not achieve anything great from the time it was incorporated in 2011 and until he left office.

“I was hoping the SRC board could do better,” he added.

Najib will continue to testify before judge Mohd Nazlan Mohd Ghazali tomorrow.

Najib faces six charges of money laundering and criminal breach of trust in the transfer of RM42 million to his account from SRC International.

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.