Update Najib’s trial Day 17: KWAP investment panel members had raised concerns on SRC

KUALA LUMPUR, May 14 (NNN-BERNAMA) — Some concerns were raised by the Retirement Fund Incorporated  (KWAP) investment panel members over the RM2 billion loan requested by SRC International Sdn Bhd, the High Court here was told today.

Vice-president of the legal and secretarial department of KWAP, Azlida Mazni Arshad, 47, said the panel had raised six concerns in the investment papers presented by the director of the fixed income department of KWAP, the late Ahmad Norhisham Hassan.

 Answering a question by former prime minister Datuk Seri Najib Tun Razak’s lawyer Harvinderjit Singh on the panel’s concern, Azlida Mazni was referring to the minutes of meeting during the Special Investment Meeting chaired by KWAP chairman Tan Sri Wan Aziz Wan Abdullah on July 19, 2011.

Harvinderjit: Apart from the concern raised about the management of SRC, was there discussion on SRC investment?

Azlida Mazni: Yes.

Harvinderjit: When the investment panel raised the concern, was it from all of them or only one or two members of the panel?

Azlida Mazni: One or two will give their opinion and then supported by the rest.

In her testimony last week, the witness said among the six concerns was that the RM2 billion loan proposal was too large for a company with a paid-up capital of RM2.

“The panel also raised the concern over the capability and credibility of SRC’s management team to venture into the natural resources industry that requires high skills,” she said.

The committee had initially approved a RM1 billion loan proposal out of a RM3.95 billion loan first requested by SRC — via a mere two-page application letter without details.

Additionally, she said the investment panel was aware of the risks associated with the proposed investment for KWAP, particularly on risk of payment, “over-concentration”, country and industry.

   The 35th prosecution witness also agreed with Harvinderjit’s suggestion that the panel was always cautious with investment or giving out loans.

Harvinderjit: Fixed income department proposed that there should be guarantee from the government for security?

Azlida Mazni: Yes

Harvinderjit: Do you agree that the proposal is to ensure KWAP’s interest is protected?

Azlida Mazni: Yes

Harvinderjit: So it’s either government guarantee or corporate guarantee with Letter of Interest from Minister of Finance Incorporated?

Azlida Mazni: Yes

Questioned by Harvinderjit whether she ever heard about the allegations made by senior members of KAWP to the Malaysian Anti-Corruption Commission (MACC) that the loan given to SRC was not utilised according to Facility Agreement, the witness said ‘Yes’.

She explained that the utilisation of the fund loaned to SRC was bound by the facility agreement. 

The RM2 billion credit facility to SRC was based on Islamic financing term Bai al Inah, a Shariah-compliant asset sale and purchase contract.

The witness also agreed to the question that whatever money from the financing amount proceeds could be used for corporate social responsibility (CSR) purposes.

Harvinderjit: At any point in time, KWAP cannot determine whether the money used for CSR was from the loan or proceeds from the investment?

Azlida Mazni: Yes.

At this juncture, Deputy Public Prosecutor Datuk V. Sithambaram interjected and argued that the question would lead to a conjecture.

“Asking her question in her opinion when there’s no evidence is what I object to,” he said, resulting in the lawyer having to ask another question. 

Najib, 66, is charged with three counts of criminal breach of trust, one charge of abusing his position and three counts of money laundering involving SRC International Sdn Bhd funds amounting to RM42 million.

The hearing before High Court Judge Mohd Nazlan Mohd Ghazali continues tomorrow.