In SRC’s US$1.1b suit against Najib, ex-director says former PM blaming him and board for RM3.6b loss is an ‘afterthought’

Malay Mail

KUALA LUMPUR, May 8 — For Datuk Seri Najib Razak to hold the entire SRC International Sdn Bhd’s board of directors accountable for damages suffered relating to the approval of sham investments totalling RM3.6 billion is nothing but baseless and an afterthought, a former company director told the Commercial Court today.

Datuk Che Abdullah @ Rashidi Che Omar was testifying as a third party in SRC International Sdn Bhd’s US$1.18 billion civil suit against Najib.

Disagreeing with Najib for blaming him for purportedly breaching his duty as a director in approving the said investment, Che Abdullah explained the decision to invest RM3.6 billion in SRC International (Malaysia) Limited (SRC BVI) was a decision by the company’s shareholders, and thus, he had no power to overrule them.

Najib, who was both prime minister and finance minister at the time, was SRC International’s sole and exclusive shareholder by way of Minister of Finance (Incorporated) under the Finance Ministry.

He was also “adviser emeritus” as empowered by the company’s Memorandum and Article of Associations (M&A), whereby the latter’s views would have to be complied with by the board in material and strategic issues involving the company.

“He (Najib) was involved in passing the shareholders’ resolution of the plaintiff (SRC International) in instructing the plaintiff to transfer RM3.6 billion to SRC BVI as one of the plaintiff’s investment plans.

“Should the shareholders act in accordance with the board of director’s advice, I strongly believe the plaintiff should not suffer any loss or at a very least mitigate their loss if any.

“Blaming me and the other directors of the board is an afterthought and without basis,” he said in his witness statement.

As to the source of the aforementioned RM3.6 billion, it originated from a loan of RM4 billion which SRC International obtained from the Retirement Fund Incorporated (KWAP) — a statutory body which manages the pension scheme for Malaysia’s civil servants.

Evidence before the court showed that the funds were transferred out of SRC BVI into various fraudulent intermediaries between December 2011 and April 2014.

However, none of the RM3.6 billion transferred out appeared to have been used to ensure the long-term supply of energy and natural resources for which the company was established, a previous witness told the same court.

Under cross-examination by Najib’s lawyer Tan Sri Muhammad Shafee Abdullah and Muhammad Farhan Muhammad Shafee, Che Abdullah was asked if he had sought a meeting with Najib when necessary, to which he replied it was improper since there were other directors who he believed had greater access to the former prime minister.

He then named Datuk Shahrol Azral Ibrahim Halmi and Tan Sri Ismee Ismail, both directors with 1Malaysia Development Berhad (1MDB) at the time, of which SRC International is a former wholly-owned subsidiary.

Che Abdullah then explained he would not have followed the instructions of the adviser emeritus if it was not in the best interests of the company, and in hindsight, should have communicated with Najib on how the company was being managed.

The hearing before Commercial High Court judge Datuk Ahmad Fairuz Zainol Abidin resumes tomorrow.

Imprisoned since August 23, 2022, Najib is serving his 12-year jail sentence and RM210 million fine for his conviction over the misappropriation of SRC International’s RM42 million funds, which has recently been reduced to six years of jail and RM50 million fine by the Pardons Board.

SRC, under its new management, had filed legal action against Najib and its former directors Datuk Suboh Md Yassin, Datuk Mohammed Azhar Osman Khairuddin, Nik Faisal Ariff Kamil, Che Abdullah, Shahrol Azral and Ismee in May 2021.

However, later, it removed six names from the suit and retained Najib as the defendant.

Additionally, Najib has brought the former named SRC International directors as third-party respondents.

SRC as a plaintiff in the writ of summons had alleged that Najib had abused his power and obtained personal benefits from SRC International’s funds as well as misappropriated the funds. Najib was SRC’s Emeritus Adviser from May 1, 2012, until March 4, 2019.

SRC International, which is now wholly owned by the Ministry of Finance Incorporated (MoF Inc), is seeking general damages, exemplary, additional interest, costs and other appropriate relief provided by the court.

SRC International is currently seeking a declaration from the court that Naijib is liable to account for the company’s losses due to his breach of duties and trust.

The company is also seeking an order that Najib pay the US$1.18 billion in losses it suffered, and damages for breach of duties and trust; including an order that Najib compensate the sum of US$120 million as well.