As guarantor, the government would have to pay KWAP back the RM4 billion loan to SRC.
9.04am: Clad in a light cream-coloured suit, former premier Najib Abdul Razak enters the court.
He is seen conferring with Muhammad Shafee Abdullah, who leads the defence team.
Also seen in court awaiting the beginning of proceedings is Attorney-General Tommy Thomas and other members of the prosecution.
9.44am: Najib enters the dock as proceedings begin.
9.45am: Justice Mohd Nazlan Mohd Ghazali allows an application from the defence to postpone the cross-examination of retired cabinet deputy secretary-general Mazidah Abdul Majid to tomorrow.
The judge makes the ruling after Shafee said had just received two documents needed for his cross-examination of the 40th witness.
The declassified documents are related to Mazidah’s witness statement, which touches on cabinet meetings chaired by Najib.
The prosecution then calls its 41st witness, Finance Ministry Strategic Investment Department deputy secretary Afidah Azwa Abdul Aziz, to the stand.
Under examination-in-chief by deputy public prosecutor Suhaimi Ibrahim, Afidah reads out from her witness statement.
9.55am: Afidah, 44, joined the Finance Ministry in 2001 as assistant secretary of the Economy Department. She is now principal assistant secretary.
10.02am: She says on August 15, 2011, SRC executives met Treasury officials. She says then-SRC CEO Nik Faisal Ariff Kamil was present that day.
10.09am: Prosecutor Suhaimi Ibrahim questions Afidah.
10.11am: Shafee interjects, saying the witness should be allowed to complete her statement before questioning. He says additional questions should be asked once the witness completes reading it. Nazlan agrees, and Suhaimi does not object.
10.15am: Najib signed the government guarantee letter for the second RM2 billion tranche of the loan from Retirement Fund Inc (KWAP) to SRC, the court hears.
Afidah testifies that it is not usual practice for a government guarantee letter to be signed by the finance minister.
A guarantee letter, she says, is usually only taken up to the level of the second finance minister for approval.
Afidah says that an internal memorandum for the government guarantee to be presented to cabinet members was prepared on the same day – Feb 2, 2012 – that Nik Faisal came to the ministry to discuss the second guarantee letter.
The draft of the internal memo then went through several layers of approvals on the same day – including by then-second finance minister Mohd Husni Hanadzlah – before it was taken to Najib, who signed it on Feb 3, 2012.
10.26am: Afidah says KWAP granted a loan to SRC before the government guaranteed it. This was the first time this had happened in her experience.
10.28am: Afidah says the two government guarantees on the RM4 billion in loans to SRC from KWAP meant that MoF would pay off any principal payments and interest accrued on the loan.
10.35am: Afidah says MoF, as a guarantor to SRC’s loan, would need to know the interest payments made to KWAP.
She says as of March 2, 2015, SRC International arrears in interest payments.
KWAP wrote to MoF on August 28, 2015, asking for the immediate payment of the overdue interest.
10.38am: Based on the letter issued by KWAP, Afidah wrote to SRC International, asking for an explanation for the missed interest payments. She didn’t receive a reply.
10.40am: She says a meeting was held between MoF, KWAP and SRC in September 2015 to resolve the issue. It was chaired by then-Treasury secretary-general Mohd Irwan Serigar Abdullah. At that meeting, it was learnt that SRC’s funds in Switzerland had been frozen and that they had not paid back any of their interest payments on the loan taken from KWAP.
10.43am: Afidah says an RM92 million bailout was arranged so that SRC did not default on the KWAP loan. In the event of default, MoF, as guarantor of the loan, would have to pay KWAP back the RM4 billion loan in 30 working days.
10.49am: Afidah says to her knowledge, SRC never paid MoF back the RM92 million. The company had not paid KWAP its interest payments, too. SRC had asked for a second short-term bailout loan from MoF and was granted a “stand-by-credit” loan of up to RM250 million for the outstanding interest payments to KWAP.
10.56am: In 2017, SRC asked for another RM300 million loan to pay KWAP interest on the RM4 billion loan. Payments had not been made since March 2017.
10.58am: She says by 2017, SRC had taken almost RM305 million from MoF (RM92 million + RM213 million).
10.59am: She says despite the outstanding amount, MoF agreed to give SRC another RM300 million.
11.01am: Afidah says only RM290 million of the RM300 million was used, nothing has been paid back to MoF. She says the government is still paying interest to KWAP.
11.04am: She says SRC’s loan with KWAP will end in 2022, 10 years after it was approved.
Afidah says the balance that the government has to pay to KWAP is RM4.15 billion.
11.12am: Suhaimi asks her to clarify the terms of the loans that was in her witness statement. She is also asked to identify Nik Faisal from a photo.
11.14am: She says a company seeking a government guarantee will be studied first before the MoF makes a decision.
“They will go through necessary documents of the company to ascertain if the guarantee can be given.”
She says for SRC, these procedures were not adhered to.
“The government guarantee was given based on their word. There were no documents given by SRC to the ministry to study and verify.”
She says everything MoF knew about SRC was told to them by Nik Faisal.
11.17am: Court is in recess.
11.56am: Suhaimi resumes his questioning of Afidah.
12.05pm: Afidah says the appointments of the board of directors, managing director and CEO for SRC were carried out by the prime minister.
The court learns that SRC could not have obtained a government guarantee for the second RM2 billion tranche of its loan from KWAP without the approval of Najib.
According to Afidah, the Loans Guarantee (Bodies Corporate) Act 1965 restricts government companies from securing a second guarantee for loans as long as the first is still outstanding.
The only exception to this, Afidah says, is the approval of the finance minister.
Suhaimi: According to Section 6 of this act, was there any restriction (for SRC) to obtain the second government guarantee?
Afidah: There was.
Suhaimi: Who could have given the approval if it (SRC) wants to get a second government guarantee (when the first guarantee is still outstanding)?
Afidah: It can be given exception with approval from the minister.
Suhaimi: Who is the minister in this context?
Afidah: The Finance Minister.
Suhaimi: Who was the Finance Minister then?
Afidah: Datuk Seri Najib Razak.
Suhaimi: From your experience, if the company became a company directly under MoF Incorporated, would there still be a restriction from acquiring a second government guarantee?
Afidah: (Even) when it becomes MoF Inc’s company, there will still be the restriction.
Suhaimi: Who can approve it?
Afidah: Finance Minister
Suhaimi: And who signed the second government guarantee?
Afidah: Finance Minister Datuk Seri Najib
12.10pm: Suhaimi ends his questioning as legal counsel Harvinderjit Singh begins his cross-examination.
12.13pm: Afidah says the Malaysian Anti-Corruption Commission (MACC) took her statement in 2015 and 2018.
Harvinderjit: So, can we say that you have given around four to five statements?
12.30pm: Harvinderjit asks Afidah when she referred to the finance minister in her statement, did she mean Finance Minister or Second Finance Minister.
She takes a long pause and says Finance Minister.
12.45pm: Harvinderjit is going through her witness statement while walking her through the criteria of a government guarantee.
1.05pm: Proceedings break for lunch and will resume at 2.30pm.
2.30pm: Proceedings resume with the cross-examination of Afidah.
Afidah concurs that the government’s guarantees for SRC’s debts of RM4 billion would be reduced if the funds in the company’s frozen Swiss bank account can be recovered.
She also agrees that among the reasons why SRC sought short-term loans from the government in 2015 and 2016 was to finance efforts to get the money in Switzerland back.
Harvinderjit: One basis to give the loans in 2015 and 2016 to SRC was for the purpose of getting back the money in Switzerland?
Afidah: No, the main reason then was for KWAP not to declare an event of default.
Harvinderjit: (But) Wasn’t this one of the basis as stated in the memorandum, that there were actions being taken to bring back the money from Switzerland?
Afidah: Yes, that was among the basis of consideration.
Harvinderjit: In your witness statement, you said the government is responsible for these loans of RM4 billion?
Harvinderjit: So when the money is returned, the government’s responsibility would also be decreased?
Harvinderjit asks her if she is aware of a meeting last year between Lim Guan Eng, Tommy Thomas and the Swiss attorney-general.
She says she is unaware of the meeting.
2.52pm: Farhan Read takes over the cross-examination. He is going through Afidah’s witness statement.
3.10pm: Farhan tells the judge the defence is establishing the process of the government guarantee as it feels the witness statement was crafted in a way that she did not understand its procedures.
He says the defence also wants to establish if she was simply preparing documents based on instructions given.
3.50pm: Afidah says her job scope is to prepare the memorandum for deliberation at cabinet meetings. She does not have any other dealings with cabinet meetings.
3.51pm: Afidah testifies that there was nothing wrong with SRC sending representatives to the Finance Ministry on Aug 15, 2011, to seek immediate issuance of a government guarantee for the first RM2 billion tranche of the loan from KWAP.
Farhan: There is nothing wrong with either the Finance Ministry asking the company to give an explanation, or the company itself come to explain?
Afidah: Correct, there is nothing wrong.
In Paragraph 12 of her witness statement, Afidah says that SRC was not called by the Finance Ministry to explain why it needed the government guarantee for the RM2 billion loan to be expedited.
Instead, representatives from the company themselves approached the ministry to offer an explanation.
SRC received the first RM2 billion tranche of the loan from KWAP in Aug 2011, and the second RM2 billion loan tranche in March 2012.
4.45pm: Afidah testifies that she was ordered to send a letter of assurance to KWAP in March 2012, which stated that the cabinet had agreed to guarantee an RM2 billion loan for SRC because the company needed the money in a hurry.
She is being asked about a Finance Ministry letter dated March 28, 2012, which informed KWAP that the cabinet had approved the guarantee for SRC and that a government guarantee letter would be issued within 10 days from that date.
Farhan: Do you agree that at the time this letter was written, the cabinet had already agreed to give a government guarantee for SRC’s loan?
Farhan: And it is stated in this letter that the Finance Ministry promises that the government guarantee letter is coming?
Farhan: So, principally, when the government has made such a promise, it means that it will just be a matter of time (before the promise is fulfilled)?
Farhan: Do you know why was this request (to send the letter informing KWAP of the approval) was made by Maliami Hamad (Afidah’s then superior)?
Afidah: I was informed that SRC was in need of money quickly.
Farhan: Do you know what was the justification?
4.56pm: Farhan is asking Afidah about the minute details of what the government would have had to do if SRC defaulted on its loans to KWAP.
DPP V Sithambaram stands up and tells the judge that the questions are legal ones that should not be asked of the witness.
Sithambaram: These are legal questions. It is not for the witness to say. Even we in the legal line have to look this (issue) up.
Judge Nazlan: Why are you (Farhan) asking the witness this question?
Farhan: She mentioned in her witness statement the possibility of default (if SRC fails to repay its loans to KWAP). I just want to know (from the witness) what would happen in the event of a default.
Sithambaram: She prepared this (witness statement and a description of her activities at the ministry) as instructed. How can she answer?
Farhan: Maybe she knew what she was doing, in preparing the documents (related to the loans). Let us explore what this witness can help us with.
The lawyer then continues his cross-examination of Afidah.
5.15pm: Proceedings break for the day and cross-examination of the witness will resume tomorrow at 9am.
Jun 18, Najib’s SRC Trial: Day 27
Jun 17, Najib’s SRC Trial: Day 26
Jun 14, Najib’s SRC Trial: Day 25
Jun 13, Najib’s SRC Trial: Day 24
Jun 12, Najib’s SRC Trial: Day 23
Jun 11, Najib’s SRC Trial: Day 22
Jun 10, Najib’s SRC Trial: Day 21
May 28, Najib’s SRC Trial: Day 20
May 27, Najib’s SRC Trial: Day 19
May 15, Najib’s SRC Trial: Day 18
May 14, Najib’s SRC Trial: Day 17
May 9, Najib’s SRC Trial: Day 16
May 8, Najib’s SRC Trial: Day 15
May 7, Najib’s SRC Trial: Day 14
May 6, Najib’s SRC Trial: Day 13
May 2, Najib’s SRC Trial: Day 12
Apr 30, Najib’s SRC Trial: Day 11
Apr 29, Najib’s SRC Trial: Day 10
Apr 25, Najib’s SRC Trial: Day Nine
Apr 24, Najib’s SRC Trial: Day Eight
Apr 24, Najib’s SRC Trial: Day Seven
Apr 22, Najib’s SRC Trial: Day Six
Apr 18, Najib’s SRC Trial: Day Five
Apr 17, Najib’s SRC Trial: Day Four
Apr 16, Najib’s SRC Trial: Day Three
Apr 15, Najib’s SRC Trial: Day Two
Apr 3, Najib Trial: Day One