Najib’s SRC Trial: Day 26

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SRC board did not approve RM2 billion leaving the company’s account.

9.07am: Former prime minister Najib Razak enters the Kuala Lumpur High Court and takes a seat at the front row of the public gallery.

Also seen are Attorney-General Tommy Thomas and Najib’s lead counsel Muhammad Shafee Abdullah.

9.09am: Najib enters the dock as proceedings begin, with former SRC International chairperson Ismee Ismail taking the stand to resume his cross-examination by defence lawyer Harvinderjit Singh.

Afif Abd Halim/TMI

9.37am: Ismee agrees with Harvinderjit’s assertion that the board did not issue a mandate for SRC’s then-CEO Nik Faisal Ariff Kamil to seek an RM2 billion guarantee from the government on Jan 31, 2012.

Harvinderjit: The (SRC) board did not give the mandate to Nik Faisal to issue the letter?

Ismee: As far as I could remember.

Harvinderjit: If the recipient, the Finance Ministry, went through the letter seeking RM2 billion government guarantee, the recipient would assume it went through the company’s system (properly checked).

Ismee: That would be a reasonable assumption.

Ismee testifies that Nik Faisal failed to brief the board at a meeting on February 14, 2012, on the government guarantee over the second loan of RM2 billion from KWAP.

Retirement Fund Inc (KWAP) issued the second RM2 billion tranche of the loan to SRC International on March 28, 2012.

Ismee agrees with Harvinderjit, saying the board was also not informed on the need for a second credit facility after the first loan was disbursed on August 28, 2011.

9.50am: The board of SRC was unaware of Nor Mohamed Yakcop’s exact role in the company despite the former minister being involved in the RM2 billion loan from KWAP.

Ismee says that Nor Mohamed, who oversaw the Economic Planning Unit (EPU), was involved in the establishment of SRC and its change of ownership from 1MDB to Minister of Finance Inc.

Harvinderjit: So, to summarise, the decision made by the government to (give a) RM2 billion grant (was based on) a memorandum from the Treasury to Minister of Finance 2 (MOF2). And what the MOF2 minutes say is that ‘setelah berbincang dengan pegawai MOF, memorandum ini disokong (After discussion with Finance Ministry officers, this memorandum is supported).’ So on the face of this, the proposal for government grant comes from the Treasury. And approval for this sokongan (support) is from the EPU minister and the Finance Ministry. Correct?

Ismee: Yes.

Harvinderjit: And the board was not aware of what exactly Nor Mohamed’s role was in SRC?

Ismee: Yes.

9.51am: Ismee says on February 29, 2012, SRC’s company account had just RM17,000, not RM2 billion.

The only board resolution ever passed involving the second loan was for RM1.8 billion deposited into Swiss and Hong Kong banks, he says.

Ismee says there may be a “vast difference” between what Nik Faisal told the SRC board and Ministry of Finance.

10.20am: Ismee agrees that the second RM2 billion tranche of the loan from KWAP that was banked into the company’s account on March 28, 2012, went out later that month without the board’s approval.

Harvinderjit: An entire RM2 billion from KWAP was credited into the account on March 28 (2012) and debited out of the account in March. The board did not approve of this.

Ismee: Yes.

Harvinderjit: The fact that the money came in and out, there is no complying with the board’s mandate.

Ismee: Yes.

Afif Abd Halim/TMI

Harvinderjit: This is serious fraud.

Ismee: Yes.

Harvinderjit: There were (supposed to be) checks in place, the money in this account cannot be moved out unless a Group A authorised signatory (signed off on the transaction), but then how was the money transferred out? You cannot tell how?

Ismee: Yes.

10.30am: Ismee Ismail testifies that he cannot say what happened to the RM4 billion loaned by the KWAP to the company in 2011 and 2012.

Under cross-examination by Harvinderjit, he says that he cannot do so without proper documentation.

Harvinderjit: You can’t say what happened to the money from KWAP… What happened to the KWAP loan to SRC?

Ismee: Without any documentary evidence or money trail, I can’t say for sure.

Ismee agrees with the defence that then-director Suboh Md Yassin may have been complicit with then-CEO Nik Faisal to defraud the SRC board over a deal struck by Gandingan Mentari Sdn Bhd and Putra Perdana Construction Sdn Bhd.

Ismee agrees with Harvinderjit’s contention that the board was kept in the dark over the deal for Gandingan Mentari to pump RM140 million into Putra Perdana Construction for the latter to invest in South Africa.

The deal involves a 70/30 profit split between Gandingan Mentari and Putra Perdana Construction.

Harvinderjit: Suboh was not honest with the board, by looking at the signature (on documents). He was not honest with the board.

Ismee: He thought it was Gandingan Menteri.

Harvinderjit: Gandingan Mentari entered an agreement with Putra Perdana Construction as a pseudo-investment manager to mine in South Africa, committing RM140 million to Putra Perdana Construction, and split 70/30 with Gandingan. This was not told to the board?

Ismee: Yes (agreeing).

Harvinderjit: It appears that Suboh was complicit with Nik Faisal.

Ismee: Yes.

10.34am: Ismee says he was not told of a transfer of RM170 million from SRC to Putra Perdana Construction in three different transactions between July and August 2014.

He says he was not aware of the existence of this money as Nik Faisal and Mohd Suboh didn’t inform the board of these transactions.

10.35am: Harvinderjit says this is a serious action that Nik Faisal and Suboh had taken, which Ismee agrees.

10.49am: Court takes a short break.

11.13am: Court resumes.

11.15am: Jho Low’s name crops up in court when Harvinderjit quizzes Ismee on former 1MDB finance director Terrence Geh representing the SRC secretary in a board meeting.

Harvinderjit asks Ismee whether he knows that Nik Faisal was a close associate of Low’s.

Harvinderjit: What about Geh? Are you aware now he is a close associate to Low?

Ismee: Now I’m aware.

Harvinderjit: And so is Nik Faisal, now you are aware?

Ismee: Yes.

Harvinderjit: So from what you are aware of now, people like Nik Faisal, Jerome Lee, Terrence Geh, they are close associates of Low?

Ismee: Yes.

11.50am: Ismee says in his resignation letter he didn’t state why he was stepping down but the SRC International board knew why.

12.35pm: Justice Mohd Nazlan Mohd Ghazali shoots down a request by Harvinderjit for the court to call an early lunch break.

Harvinderjit makes the request during his cross-examination of Ismee over the validity of several documents related to the company that had been tendered as evidence – including meeting minutes and shareholder resolutions.

“Yang Arif, can we break for lunch?” says Harvinderjit. “What time do we usually break for lunch?”

Nazlan tells him that court usually breaks at 1pm.

1.08pm: Court breaks for lunch and will resume at 2.30pm.

2.40pm: Court resumes with Ismee being cross-examined.

3.30pm: Harvinderjit locks horns with Ismee again, this time over a suggestion that the SRC board did not need approval from Najib for company decisions.

Harvinderjit suggests that Najib’s approval was not necessary, as the wording of the company’s memorandum and articles of association (M&A) only stipulates obtaining the former premier’s “advice.”

Ismee says in response that there is more to the matter than what is written on paper.

Harvinderjit: But it (M&A) doesn’t say ‘approval’. It doesn’t require approval by the prime minister.

Ismee: I’m sure the article can’t say that, can it? (It is the) company’s act, (it cannot state) direction or approval. This is why I say, this is one of the things that are tersirat (implied).

Ismee’s answer seems to upset Harvinderjit, who challenges the witness for continually referring to “tersurat (express)” or “tersirat.”

This prompts an interjection from deputy public prosecutor V Sithambaram, who objects to Harvinderjit arguing with the witness.

“You are not supposed to argue with him, you are supposed to get answers (from him),” he says.

Harvinderjit then apologises to the court and continues with the cross-examination of Ismee.

3.40pm: Defence produces a letter from Nik Faisal to Putra Perdana Construction on August 8, 2014, to increase the investment value into a mining venture in South America from RM140 million to RM170 million. The venture involved SRC International subsidiary Gandingan Mentari.

Ismee testifies that the letter was not shown to the board he led.

4.20pm: Ismee agrees with the defence that there is a discrepancy between the date of an SRC director’s resolution on the placement of the second RM2 billion tranche of the loan from KWAP – Feb 17, 2012 – and the date of the loan actually being approved, on March 23 that year.

Harvinderjit: There is a letter of offer (of the second RM2 billion tranche of the loan) from KWAP on March 23, 2012. Prior to that, there was no facility approved by KWAP.

How did this facility come to be approved? You are unaware whether on staggered drawdown or lump sum basis?

Ismee: Yes.

Harvinderjit: There is a director’s resolution on Feb 17, 2012, talking about the placement of the funds (second RM2 billion tranche), but that cannot be correct, it presumed that the facility had already been granted (by KWAP).

Ismee: At that point, it was represented (by then SRC CEO Nik Faisal) as such (to the board).

Harvinderjit: This resolution was dated after facility drawdown and dated Feb 17, 2012. It does not appear right that there is a directors’ resolution to utilise the funds (before the loan application was even approved)?

Ismee: Okay.

The first RM2 billion tranche of the loan from KWAP was received by SRC in August 2011. The second RM2 billion tranche was received in March the following year.

4.30pm: Ismee and Harvinderjit clash again over whether Najib equates to ‘government’.

The heated cross-examination between the lawyer and the 39th witness is over Paragraph 22 of Ismee’s written witness statement.

The paragraph states that every time Ismee raised issues about the governance of SRC, Nik Faisal kept saying that the matter had been discussed and agreed by the government.

In that paragraph, Ismee states that in his mind, ‘the government’ equates to Najib.

Harvinderjit: If he (Nik Faisal) is the link with the prime minister (Najib), why you do not just use the word prime minister?

Ismee: I used the word prime minister.

Harvinderjit: Then you cannot say government. When you raised the issue of governance, did you refer to the minutes (of SRC board meetings)?

Ismee: Yes.

Harvinderjit: Najib was not the government, he was just the prime minister and finance minister.

Ismee: He was the prime minister.

Harvinderjit: Nik Faisal used the word ‘government’ in the context of government to government, not one man (Najib). There must be the Economic Planning Unit dealing with this, the whole machinery. Government guarantees cannot come about until the cabinet approves it first, and there are many ministers in Cabinet. The government macro decision represented to you cannot be tied to just the prime minister.

Ismee: Yes.

4.44pm: Harvinderjit is going through Ismee’s witness statement which he had read out on the first day. In the last paragraph of the statement, Ismee said that Najib had the ability to hire and fire any director as he is the shareholder. Ismee says that the last paragraph was in his own words and not coaxed by MACC officers who took his statement.

4.50pm: Ismee concedes that the authenticity of documentary evidence originating from Nik Faisal can be called into question.

Harvinderjit asks Ismee if all the meeting minutes and shareholder resolutions – supposedly from Minister of Finance Incorporated (MOF Inc) – brought to the attention of the company board by Nik Faisal are “in doubt now.”

The prosecution initially objects to Harvinderjit’s line of questioning, before he tells the court that he wants to establish whether the documents represented to the board by Nik Faisal were untrue.

He is allowed to continue with his questions, and Ismee answers that it is “possible.”

“It is sad,” the witness adds.

Harvinderjit then requests for Justice Mohd Nazlan Mohd Ghazali to adjourn today’s proceedings, saying that he is almost done with his cross-examination, but needs to go through his notes again to ensure nothing was missed.

He adds that lead defence counsel Muhammad Shafee Abdullah also needs about an hour to cross-examine Ismee.

Nazlan then adjourns the hearing to 9am tomorrow.


Earlier reports:

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 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