Najib’s SRC Trial: Day 17

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A witness from KWAP testifies that a handwritten note by Najib indicating his approval for SRC’s request to secure a loan from the retirement fund was only a request, instead of instruction.

Chronology of Events:

9.02am: Wearing a black suit and blue tie, Najib enters the court and takes a seat at the front row of the public gallery.

Najjua Zulkefli/TMI

However, his lead counsel Muhammad Shafee Abdullah is first attending mention of his own money laundering case before another Kuala Lumpur High Court.

Once the case mention is done before judge Collin Lawrence Sequerah, Shafee will proceed to the SRC International trial.

10.04am: Proceedings for the day have yet to start so Najib steps out of court with his aides. They are seen chatting on public benches outside the courtroom.

10.31am: Shafee and his team enter the courtroom, along with Najib, who takes a seat in the public gallery.

Shafee and other members of the defence team are seen preparing at the front of the court for the proceedings to commence.

Attorney-General Tommy Thomas is also seen in court with other members of the prosecution.

It is understood that judge Mohd Nazlan Mohd Ghazali will first attend to a separate unrelated case mention, before proceeding with Najib’s SRC trial.

Najib enters the dock to await proceedings.

10.40am: Nazlan fixes Jan 6 next year for the first day of Najib and Mohd Irwan Serigar Abdullah’s CBT trial involving RM6.64 billion.

The other dates set are Jan 7-9, 20-23, 27-30, then Feb 3-6, 10-13,17-20, 24-27, and March 2-5, 9-12, to April 6-9, 13-16, 20-23, 27-30.

Irwan is not present as he is allowed to be exempted from today’s proceedings.

After this proceeding, Najib’s SRC trial begins.

10.49am: The 35th witness, Retirement Fund Inc (KWAP) vice-president (legal and secretarial affairs) Azlida Mazni Arshad returns to the stand to produce five original documents related to the RM4 billion in loans. She is cross-examined by defence counsel Harvinderjit Singh. She says she was questioned “about three times” in 2015 by MACC on the matter.

Azneal Ishak/Malaysiakini

10.57am: Azlida says MACC officers Ashraff and Rosli questioned her and took her statement.

11.06am: Harvinderjit asks her that when KWAP chairman Wan Abdul Aziz Wan Abdullah gives an instruction for a loan to be approved, whether it would it be followed. She says yes.

Harvinderjit: Is the investment panel the final decision-making body in KWAP?

Azlida: In investment matters, yes.

Harvinderjit: By practice, there are two members of the Finance Ministry on the panel.

Azlida: Yes, according to the Act.

Harvinderjit: The Act goes on to say that the CEO of KWAP is the secretary of the investment panel?

Azlida: Yes, the CEO is the secretary of the panel.

Harvinderjit: Are there loans given every year to the federal government?

Azlida: Yes.

11.21am: Harvinderjit says that the reason two members of the Finance Ministry are in the panel is to safeguard the interest of the federal government. She agrees.

During cross-examination by defence counsel Harvinderjit Singh, Azlida agrees that there are two levels of authorisation that need to be passed before a panel investment paper prepared by FID personnel is presented to the KWAP investment panel.

Azlida also agrees that the two authorities involved – namely the head of department for FID, and KWAP CEO – could choose not to sign the paper should they feel that something is not right.

Harvinderjit: If a member of FID finds that loan applicant is questionable, would they put this (concern) in paper?

Azlida: Yes.

Harvinderjit: You have a vice-president (in charge) of FID. There is no compulsion for them to sign (papers)?

Azlida: Yes.

Harvinderjit: In fact, if anybody force them to sign, will a police report be lodged?

Azlida: Yes.

Harvinderjit: Having signed the investment paper, FID members are bound to what they say?

Azlida: Their proposals? Yes.

Harvinderjit: (refers to an investment panel paper) Here we have 19/2011 investment panel paper. Prepared by FID?

Azlida: Yes.

Harvinderjit: Page 14. In preparation of this (paper), there are two layers. The HOD (head of department) and CEO?

Azlida: Yes.

Harvinderjit: If any of three persons (HOD, CEO, and person preparing the paper) find anything lacking in the investment paper, they can choose not to sign?

Azlida: Yes.

Harvinderjit: It is their duty to act in the best interests of KWAP?

Azlida: Yes.

The witness, in her testimony, also agrees to a question put by Harvinderjit that the panel investment paper prepared by FID was a recommendation to the investment panel, and that it was approved by the head of FID and KWAP CEO.

Harvinderjit: The panel was invited to deliberate and consider on the following. The FID did not recommend this?

Azlida: They recommended it.

Harvinderjit: When members of the FID have prepared and HOD reviewed (a paper), and signed off there, we take it as though they are representing to the CEO and investment panel, that whatever is being proposed and recommended here should be seriously considered by the investment panel?

Azlida: Yes.

11.40am: Azilda says six panel members approved an RM1 billion loan to SRC International.

The court then takes a short break. It is expected to resume with more questions by Harvinderjit.

12.14pm: Court resumes.

12.17pm: Harvinderjit continues questioning Azlida on KWAP’s loan approval processes and its investment panel.

12.21pm: Harvinderjit asks if the investment panel can meet with loan applicants and deal with them directly. He also asks whether it can amend any recommendations in the loan paper. Azlida answers yes to both questions.

She also acknowledges that the investment panel has the power to disburse loans on its own terms and conditions.

Harvinderjit: If it had found that the investment paper was lacking, it can send it back to the department and say it’s lacking.

Azlida: Yes, it can do that.

Azlida testifies that KWAP’s investment panel is not bound by the instruction of any person or body regarding matters under the purview of the retirement fund for public servants.

Harvinderjit refers to section 14 of the Retirement Fund Act 2007, which states that the panel can only decide on loans for investment-related matters which brings profits to the fund.

Harvinderjit: The investment panel cannot approve loans where terms are not remunerative to the fund?

Azlida: Yes.

Harvinderjit: Otherwise, they commit a criminal offence where they face a possible RM2 million fine or maximum 10 years’ jail. Every investment panel member is bound by this?

Azlida: Yes.

Azlida also confirms to Harvinderjit that the panel does not need to secure ministerial approval.

In response to his query whether the panel is bound by the instruction of the prime minister, deputy prime minister or any other minister, she merely says, “Ideally they are not bound.”

Azlida: KWAP fixed income department could’ve rejected SRC loan bid.

12.33pm: Harvinderjit asks if the panel can defer its decision to approve loans until it is satisfied. Azlida agrees.

12.41pm: Harvinderjit: If an investment in KWAP records has gone through all levels of approval, you would agree on record that process (requirements) have been met?

Azlida: Yes.

Harvinderjit: In KWAP, you have an open-door policy, where if you aren’t happy with something, you can voice it out.

Azlida: Yes.

Harvinderjit asks if the panel can defer its decision to approve loans until it is satisfied. Azlida agrees.

12.45pm: Azlida testifies that the KWAP investment panel minutes did not show that panel members were coerced by then prime minister Najib to approve a loan totalling RM4 billion to SRC.

Harvinderjit: There are no minutes on the KWAP investment panel saying they approved the loan because it was instructed by the prime minister (Najib in 2011 and 2012)?

Azlida: Not in the minutes.

Harvinderjit: If it were true, it would have been in the minutes?

Azlida: Yes.

Harvinderjit: There were no minutes of the investment panel where it was noted that they (KWAP investment panel members) had no choice but to approve the loan to SRC, (regardless of) whether it was for the first or second loan?

Azlida: Yes.

Harvinderjit: Otherwise, they would have breached their duty to KWAP?

Azlida: Yes.

12.50pm: Azlida testifies that a handwritten note by Najib indicating his approval for SRC International’s request to secure a loan from the retirement fund in 2011 was only a request, instead of instruction.

She also agrees with defence counsel Harvinderjit that KWAP’s fixed income department also understood that Najib’s note was not an instruction.

As such, Azlida confirms, this is why the department went on to propose an RM1 billion loan for SRC, instead of RM3.95 billion as applied for by the 1MDB subsidiary.

On May 2, another KWAP employee named Amirul Amran Ahmat had testified that Najib had indicated his approval for SRC’s request for a loan from the retirement fund through a handwritten note.

The note, which stated “Agree with KWAP giving the loan to SRC”, was written on a letter sent to Najib by SRC International on June 3, 2011.

The letter was an application by SRC for an RM3.95 billion loan from KWAP for the purpose of “modal pusingan” (working capital) and unrestricted general investment.

The court then takes a 30-minute break.

1.58pm: Proceedings resume, with Harvinderjit continuing his cross-examination.

Harvinderjit: Can the investment panel question the CEO on investments if the CEO approves an investment paper?

Azlida: Yes.

Harvinderjit: The fact that the investment panel deferred the loan pending more information from SRC; it shows there was no compulsion from the panel to rush the loan?

Azlida: Yes.

2.25pm: Azlida admits that she was not personally present at the time when Najib allegedly communicated for the retirement fund for public servants to expedite the RM2 billion loan application to SRC.

Harvinderjit: You were not there during the (actual) communication (by Najib to then KWAP chairperson Wan Abdul Aziz Wan Abdullah)?

Azlida: Yes.

Harvinderjit: Any such (alleged) communication was based on the (KWAP) CEO (chief executive officer) reporting (to KWAP special investment panel meeting)?

Azlida: Yes.

Previously, the witness testified that KWAP’s then CEO Azian Mohd Noh had informed the panel meeting on July 19, 2011, regarding the purported urging by Najib to Wan Abdul Aziz.

3pm: Azlida tells the court that the retirement fund’s decision to use Islamic financing method in its loan facility to SRC was an internal decision.

She states that she, however, does not know who made the decision and believes Azian might know the answer.

Earlier, the court also hears from Azlida that a KWAP investment panel meeting decided in 2011 that 1MDB CEO and chairperson should be interviewed over SRC International’s loan application.

She testifies that the CEO and chairperson of KWAP were supposed to meet with the CEO and chairperson of 1MDB.

She also agrees to a question by Harvinderjit that this was an example that the panel had deliberated on the investment paper.

3.05pm: DPP V Sithambaram objects to Harvinderjit’s question to Azlida on whether it would be hard to determine how the loan to SRC was utilised as the money was mixed together.

Sithambaram tells the lawyer that the question is conjecture.

Harvinderjit: For example, say loan facility says KWAP loan money cannot be used for Corporate Social Responsibility, but to conclude that, must first differentiate the loan money and (other) proceeds.

If money is mixed together, this would be hard to determine.

Sithambaram: This is a legal question.

Harvinderjit: This is a legal witness, can give a legal opinion.

Sithambaram: Whether the money is mixed or not, this is conjecture.

Even though judge Nazlan appears not having said anything, Harvinderjit is seen trying to rephrase his question.

Among Najib’s charges are for money laundering, which involves the transfer of RM42 million of SRC’s funds across multiple entities.

3.35pm: Azlida testifies that it was directed by the Finance Ministry via a letter dated March 28, 2012, to disburse the RM2 billion loan to SRC first before a letter of government guarantee was provided 10 days later.

Harvinderjit refers to an exhibit, which is a letter from the ministry to KWAP dated March 28, 2012.

The lawyer says that the letter was signed by a ministry representative named Maliami Hamad, and that it indicates cabinet approval for the letter of guarantee for the second loan of RM2 billion by SRC International.

Harvinderjit: This shows the government guarantee of the loan?

Azlida: Yes.

Harvinderjit: The government asked (for KWAP) to disburse the loan first (before the letter of guarantee is issued)?

Azlida: Per letter.

Harvinderjit: This shows a firm commitment by the government, that the commitment never changed from the second facility (RM2 billion) to this letter, and then to the letter of guarantee?

Azlida: Yes.

Harvinderjit then asks whether the letter symbolises the government’s commitment to guarantee for the second RM2 billion loan, to which she replies “Yes”.

This contrasts with the first tranche of RM2 billion loan given by KWAP to SRC in August 2011, whereby the government’s letter of guarantee was issued first before the loan was disbursed.

3.40pm: Harvinderjit has stopped his cross-examination for the day.

Court resumes at 9am tomorrow.

Earlier reports:

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 7, Najib Fails in Second Bid to Remove Sri Ram as 1MDB Lead Prosecutor

May 7, Najib Signed Guarantee Letter for RM2B KWAP Loan to SRC, KWAP Rules Breached

May 6, Najib’s SRC Trial: Day 13

May 2, Najib’s SRC Trial: Day 12

May 2, RM1M Golden Handshake in Final Month as PM for Najib

Apr 30, Najib’s SRC Trial: Day 11

Apr 29, Najib’s SRC Trial: Day 10

Apr 29, Court Throws Out Najib’s Application to Strike Out 7 SRC Charges, Trial to Go On

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