Najib’s SRC Trial: Day 23

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Ex-SRC CEO Nik Faisal may have lied to the company’s board about loan from KWAP, and board unaware of second bank account into which RM2 billion was deposited.

8.57am: Former prime minister Najib Razak enters the courtroom and is seen conferring with his defence counsel Yusof Zainal Abiden in the public gallery.

Seth Akmal/TMI

Spotted in the dock is a copy of the book The Laws of Human Nature by Robert Greene, as well as a few cushions for Najib’s back.

9.05am: Clad in a dark suit and dark blue tie, former Pahang menteri besar Adnan Yaakob enters the courtroom and takes a seat in the public gallery to await the beginning of proceedings.

Set Akmal/TMI

Also present in court are Najib’s lead defence counsel Muhammad Shafee Abdullah and other members of the defence team, as well as DPP V Sithambaram and other members of the prosecution team.

9.19am: Najib enters the dock as proceedings begin.

The cross-examination of former SRC chairperson Ismee Ismail by defence lawyer Harvinderjit Singh resumes.

9.50am: Harvinderjit takes the witness back to end-2010 when SRC was being conceptualised as a vehicle for long-term strategic investments in natural resources.

Ismee agrees former SRC CEO Nik Faisal Ariff Kamil played an important role in the founding on the company.

Harvinderjit: It leads you to believe that his man is high level.

Ismee says he does not know if Nik Faisal held a position in 1Malaysia Development Bhd, which owned SRC until February 2012, when ownership was transferred to the MoF.

It was 1MDB CEO Shahrol Azral Ibrahim Halmi who decided on senior appointments, he adds.

Ismee says he only learnt the details of SRC at its first board meeting on August 23, 2011.

Ismee says 1MDB provided SRC with a start-up capital of RM1 million and the latter later received an RM20 million launching grant from the Economic Planning Unit. SRC had initially asked the EPU for RM3 billion, the court was told earlier in the trial.

Court takes a 10-minute recess.

10am: According to Ismee, the 1MDB board did not know that the Retirement Fund Incorporated (KWAP) offered to provide a loan to SRC International based on a corporate guarantee from 1MDB.

He then agrees to Harvinderjit’s suggestion that the board might have chosen this option if they knew about it then, instead of using a government guarantee to secure the loan.

Harvinderjit: My point is this. There was an option for 1MDB to be the guarantor. It could have been material for the board to take note that 1MDB offered itself as a guarantor. And (the) government guarantee was (only) plan B. You said you can’t remember from memory if the 1MDB board was told about this corporate guarantee (option). My point is that it could be in place if you knew (about it)?

Ismee: Yes.

Earlier in the trial, other witnesses who were involved in KWAP’s process of approving a total of RM4 billion in loan facilities to SRC had testified that the investment panel KWAP initially decided to offer a loan to 1MDB, instead of providing a loan directly to SRC.

In addition to being a 1MDB non-executive director, Ismee was also the former chairperson of SRC.

SRC is a former 1MDB subsidiary.

10.30am: Ismee agrees that the company’s board of directors was uncertain about the veracity of a proposed joint venture involving Abu Dhabi-based Aabar Investments PJS.

Aabar Investments PJS is a subsidiary of the International Petroleum Investment Company (IPIC), an investment entity owned by the Abu Dhabi government.

A company called Aabar Investments PJS Limited (Aabar-BVI) eventually received funds from 1MDB, and is one of the entities linked to the 1MDB investigation. Aabar-BVI bore a similar name to the IPIC’s Aabar, but there was no affiliation between IPIC and Aabar-BVI.

During cross-examination by Harvinderjit, Ismee agrees with the lawyer that the board was uncertain whether there was such a proposed joint venture.

Harvinderjit was referring to the minutes in which Nik Faisal told the company’s board in 2011 about the proposed joint venture following a high-level meeting between representatives of Malaysia and Abu Dhabi.

This had led to the initial application by SRC for an RM3.95 billion loan from KWAP.

Harvinderjit: There was a meeting in June 2011 where both parties had a discussion, Malaysia and Abu Dhabi, on strategic resources. This referred to Najib.

Ismee: Yes.

Harvinderjit: Since then, there was rapid implementation and disbursement of the launching grant (to SRC). It goes on to show how Nik Faisal told the board about a high-level discussion between Malaysia and Abu Dhabi representatives, then this company (Aabar-BVI) was incorporated. (This involved) a proposed joint venture arrangement. The launching grant and process (of loan from) KWAP hinged on this potential deal with Aabar Investment.

Ismee: Yes.

Ismee also agrees with Harvinderjit’s assertion that the SRC board of directors was not shown any other documents by Nik Faisal as proof of this proposed joint venture.

Harvinderjit: The board had the impression of this (joint venture) being government-to-government. That put a stop to further inquiries about the deal.

Ismee: Yes.

Harvinderjit: Whether that was true or not, or whether there was any (government) department working on the Aabar deal, you did not know.

Ismee: (Nods head)

Harvinderjit: He (Nik Faisal) gave the impression he knew more.

Ismee: Yes.

12.35pm: Harvinderjit grills Ismee on whether Nik Faisal had been lying to the company’s board of directors.

Harvinderjit: The (SRC International) board was told (by Nik Faisal) about the JV (a joint venture involving Aabar Investment) arising out of a meeting between Najib and an Abu Dhabi head, in a letter in June (2011).

SRC applied for the (RM3.85 billion) loan (from KWAP) with nothing to do with the Aabar partnership.

It appears (that) Nik Faisal was lying to the board?

Azneal Ishak/Malaysiakini

Ismee: Yes. The board wasn’t even told I was nominated as chairperson (of SRC).

Harvinderjit: This letter dated June 3, there is no letter from PM (then premier Najib) approving Nik Faisal (be appointed as) director of SRC in June (2011).

Ismee: Yes.

Harvinderjit: You agree that when you came as (SRC) director in August 2011, it would have been material for the board to be told earlier that the company (SRC) was already committed to the RM3.95 billion loan (from KWAP)?

Ismee: Yes.

Ismee also agrees with Harvinderjit’s assertion that SRC’s board of directors was kept in the dark by Nik Faisal about the fact he had applied for an RM3.95 billion loan from Najib on behalf of the company, through a letter from SRC to Najib dated June 3, 2011.

Ismee agrees that the company’s board was not informed by Nik Faisal about the loan application during the first board meeting in Aug 2011.

12.50pm: SRC’s board of directors was not briefed by Nik Faisal about his letter to the Finance Ministry seeking a government guarantee for a loan from KWAP in August 2011.

Ismee testifies Nik Faisal did not disclose his letter at the first meeting convened by the board not long after he sent the letter to the ministry.

This was according to documents that had been tendered in the court as evidence.

Harvinderjit: I will show you another letter. Aug 12, 2011, again by Nik Faisal, signing as managing director and CEO. Now (the letter is addressed) to the Finance Ministry seeking a government guarantee of RM2 billion (loan).

Ismee: Yes.

Harvinderjit: You were never told about this letter.

Ismee: Yes.

Harvinderjit: (You were) also not told about the Aug 12 letter (from Nik Faisal to KWAP)?

Ismee: No.

Harvinderjit: This was after you joined SRC’s board of directors?

Ismee: Yes.

Harvinderjit: Should (this) have been told by Nik Faisal during the first board meeting?

Ismee: It should have been.

The lawyer and the witness go over an email thread in which Nik Faisal gives KWAP the details of SRC’s potential investments in Indonesian companies.

Harvinderjit asks Ismee if the board was informed of these investments. Ismee agrees it was not.

Ismee says he was not told of any of Nik Faisal’s meetings with KWAP nor their correspondence.

Court is adjourned until 2.30pm.

2.35pm: Court resumes with Harvinderjit asking Ismee if the board was aware if bank accounts were open for the company. Ismee says he did not know.

Ismee says the board was not told of a resolution to add Terence Geh as a signatory to one of their accounts.

Ismee also says he was not told of any transactions that were carried out in that account.


2.45pm: Ismee says the board was not aware there were two accounts opened in AmBank on behalf of SRC. He says it had no control over the second account that ends with ‘736’.

Ismee says Nik Faisal and Shahrul as board directors should have informed the board that there was a second bank account.

Harvinder: And this (ending) 736 account, throughout the time you were director (in SRC), was never under the control of the board?

Ismee: Yes.

Harvinderjit: If the board didn’t know about it, it couldn’t be under the control of the board, correct?

Ismee: Yes.

Harvinderjit: By not disclosing (its) existence, (it is) a measure to ensure board control of the account owned by SRC is bypassed, correct?

Ismee: Yes.

Prior to this testimony, the court had heard that an AmBank account ending with the numbers 736 was opened in Jan 2011, with only two persons named as its signatories, namely its then-directors Nik Faisal Ariff Kamil and Vincent Koh Beng Huat.

At that point in time, SRC had not formed a board of directors yet. Nik Faisal was later to become the company’s CEO and managing director when the board was formed in August that year.

3.17pm: Ismee admits that Nik Faisal never told the board of directors that he had asked KWAP to transfer an RM2 billion loan into an AmBank account registered to SRC.

Harvinderjit: Three days after an Aug 2011 meeting with SRC’s board of directors, Nik Faisal signed a letter for KWAP to draw down the RM2 billion facility to account 736.

Ismee: Yes.

Harvinderjit: We are moving to a more serious transgression. The (SRC) board was never told about the drawdown to move RM2 billion to an account (736) it was not even aware of.

Ismee: It appears so.

Harvinderjit: I can see that Tan Sri (Ismee) is disturbed, but it is what it is. Look at the entries for Aug 2011 (in the AmBank account’s statement) in the name of SRC, where an RM2 billion amount in four tranches of RM500 million each was credited into this account on Aug 29, 2011. This is serious, that on the same day, the entire RM2 billion was also debited out.

4pm: Court is in recess.

4.22pm: Court resumes. Lawyers go through the minutes of an SRC board meeting.

4.35pm: Harvinderjit and Ismee clash over the “reporting line” mentioned in the disputed minutes of a Sept 7, 2011, meeting between Nik Faisal and Najib.

They argue over whether this means Najib’s approval was required for SRC’s dealings.

Previously, the defence successfully stopped the minutes of the alleged meeting being admitted as evidence. The document was classified as ‘ID499’ instead.

These minutes purportedly contain Najib’s directive to the SRC board on how to use the RM2 billion loaned by KWAP that year.

Harvinderjit: All the minutes talk about is a functional reporting line to the prime minister (Najib), it does not mean get his approval.

Ismee: It refers to ‘Reporting to me (Najib), you need to get my agreement.’

Harvinderjit: Or it could just mean furnishing regular reports (to Najib).

Ismee: That is not what is said (of regular reports) in ID499.

Harvinderjit: Yes, it is just reporting what was done, not to get approval.

Ismee: Then what is functional reporting? When you say report to prime minister, what does it mean then?

Harvinderjit: That was your perception, that it is needed to get the prime minister’s consent.

Ismee: Yes.

Harvinderjit: But this jeopardises the requirement of (SRC) to get the approval of 1MDB.

Ismee agrees with Harvinderjit that the SRC board needed to seek approval from 1MDB, which was the sole shareholder of the company in 2011.

He also agrees that any person acting on instructions needs to be in line with the company’s aspiration, which is to get 1MDB’s approval.

5.11pm: Court adjourns for today, and will continue with Ismee taking the stand again tomorrow at 9am for his fourth day of cross-examination.

Earlier reports:

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 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