Former SRC director slams Najib for blaming SRC board for misappropriation of RM3.6b, says his accusation a baseless afterthought

Former SRC director slams Najib for blaming SRC board for misappropriation of RM3.6b, says his accusation a baseless afterthought

KUALA LUMPUR (May 8): The former director and chairman of the board of SRC International Sdn Bhd has slammed Datuk Seri Najib Razak for passing the blame to the board for the misappropriation of RM3.6 billion from the company, saying the accusation was nothing more than an afterthought and without basis.

Datuk Che Abdullah @ Rashidi Che Omar, 75, who was testifying as a third party witness in SRC International’s US$1.18 billion (RM5.64 billion) civil suit against Najib, also said he disagreed with Najib’s contention that the damages suffered by SRC International were due to him (Che Abdullah) breaching his duty as a director of the company.

Najib claimed Che Abdullah had approved the investment of RM3.6 billion out of the RM4 billion loan SRC International had secured from the Retirement Fund Inc (KWAP) into SRC British Virgin Islands (SRC BVI), which turned out to be a sham as SRC BVI was a shell company controlled by fugitive financier Low Taek Jho or Jho Low.

But according to Che Abdullah, it was Najib who passed the shareholders’ resolution for SRC International to invest the RM3.6 billion into SRC BVI.

“I totally disagree [with Najib’s claim]. The decision for the investments of RM3.6 billion was the decision of the shareholder of the plaintiff [SRC International],” he said. Najib, in his capacity as finance minister at the time, was the sole shareholder of SRC International, which was under the Minister of Finance, Inc.

Che Abdullah, who said he was appointed to the board in 2011 shortly after the funds were funnelled out, said the board of directors had actually advised SRC’s management to liquidate the investments. But the management, whom he said had claimed to have direct communication with the adviser emeritus — which was also Najib — dismissed the board’s advice.

“Had the shareholders acted in accordance with board of director’s advice, I strongly believe that SRC International would not have suffered any loss or at the very least, their loss would have been mitigated,” he said.

“Blaming me and the other directors is an afterthought and without basis,” he said.

Che Abdullah said SRC International’s board had also asked the company’s former chief executive officer Nik Faisal Ariff Kamil to bring back the funds since the liquidation did not materialise, but Nik Faisal was always ready with an excuse. Consequently, Che Abdullah said he decided to resign from the company.

“Since the liquidation of the investments did not materialise, I resigned from the company. Whenever we asked Nik Faisal to bring back the money, he gave excuses such as the currency rate was low. I was dissatisfied with Nik Faisal as he was unable to bring back the money,” he said.

He also said he had never met Najib in person nor spoken to him personally during his tenure with SRC International.

“I don’t have the power to overrule the idea of the investment as the matter was decided by Najib,” he added.

Che Abdullah: I don’t know the purpose of KWAP’s loan

Che Abdullah said he had no role in SRC International’s loan application to KWAP, nor any knowledge of the loan’s purpose. The loan, he said, had already been approved when he joined the company as director. The board, he said, then received clear instruction from SRC International’s shareholder — which was Najib — to not interfere in the operations of SRC BVI.

“I was not involved in the loan application nor approval. The loan was already approved when I joined the company. I do not know what was the purpose for the company taking up the loan… We also received clear instruction from the shareholder [Najib] via a letter that SRC International should not interfere with the operations of SRC BVI,” he said.

Besides Najib, SRC International is also suing Nik Faisal, who is currently at large, over RM4 billion KWAP loan given to SRC in two tranches — one in the second half of 2011 and the other in the first half of 2012.

In the suit SRC International filed in May 2021, SRC claimed RM3.6 billion out of the RM4 billion loan was immediately transferred out when the funds came into the company, of which US$120 million ended up in Najib’s bank account.

SRC International alleged that Najib, who was its emeritus adviser from May 1, 2012 until March 4, 2019, had abused his power and obtained personal benefits from the company’s funds, as well as misappropriated the funds.

It wants a declaration from the court that Najib is liable for the company’s losses due to his breach of duties and trust, and for Najib to pay the US$1.18 billion in losses it suffered, together with damages for breach of duties and trust. It also wants an order for Najib to compensate the company for the US$120 million that allegedly went into his bank account.

The SRC International lawsuit had initially included Che Abdullah, together with other SRC directors at the time — Datuk Mohammed Azhar Osman Khairuddin, Datuk Shahrol Azral Ibrahim Halmi, Tan Sri Ismee Ismail, and Datuk Suboh Md Yassin — as defendants in the case, but later dropped them.

Najib, however, brought them back as third parties in the suit. A defendant can seek to do so in order to claim contribution, indemnity or any remedy which is claimed by the plaintiff.

In the meantime, SRC has obtained a judgement in default against Nik Faisal, who was named as Najib’s proxy, in the civil suit.

Najib, meanwhile, has been jailed since Aug 23, 2022. He was sentenced to serve a 12-year jail sentence and fined RM210 million after being convicted of misappropriating RM42 million of SRC’s funds. But his jail sentence was recently reduced to six years, while the fine was cut to RM50 million by the Pardons Board.

The trial will continue on Thursday before High Court judge Datuk Ahmad Fairuz Zainol Abidin.