SRC sues Najib, 6 others for alleged breach of trust over RM4b KWAP loan

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SRC International Sdn Bhd, under its new management, has filed a suit against former prime minister Najib Razak and six others for alleged breach of trust and breach of statutory duty in relation to the RM4 billion Kumpulan Wang Persaraan Diperbadankan (KWAP) loan to SRC.

Through the court’s e-filing system, SRC, which is a subsidiary of 1Malaysia Development Berhad (1MDB), as the plaintiff, filed the writ of summons on May 7, naming Najib and six former SRC directors – Suboh Md Yassin, Nik Faisal Ariff Kamil, Mohammed Azhar Osman Khairuddin, Shahrol Azral Ibrahim Halmi, Ismee Ismail and Che Abdullah@Rashidi Che Omar as the first to seventh defendants.

TMI

Najib was the adviser emeritus of SRC from May 1, 2012, to March 4, 2019.

SRC, which is now wholly owned by the Ministry of Finance Incorporated (MoF Inc), alleged that all the defendants conspired and committed a breach of trust.

It also claimed the former prime minister had abused his power and obtained personal benefits from SRC funds as well as misappropriated them.

As such, the plaintiff is seeking a declaration that all the defendants are liable to pay the loss of investment funds as a result of the use of the loan amount in addition to claiming general damages, exemplary, additional and interest, costs and other appropriate relief provided by the court.

SRC, in its writ of summons, said that in January 2019, the company was placed under the care of officials from MoF (new management) and, after scrutinising and reviewing SRC records, found that previous directors had not taken any reasonable steps to ensure KWAP’s loans amounting to RM4 billion to SRC in 2011 and 2012 were used properly to finance the company’s general investment activities and general working capital requirements.

The company claimed that the previous directors did not monitor the disposal of RM3.6 billion to SRC BVI (proposed investment fund) allegedly for SRC to undertake investment activities in the energy resource sector overseas and failed to monitor the Malaysian government’s exposure to guarantees given to SRC as well as failed to inquire about the misappropriation of SRC funds.

“The new management also found that a large number of withdrawals, transfers and use of KWAP loans were fraudulent or wrong,” the company said in its writ of summons.

On the same day (May 7), 1MDB, as the plaintiff, filed a suit against law firm Messrs Wong & Partners and its partner Brian Chia Hock Gee as the first and second defendants, seeking US$1 billion (RM4.1 billion) in damages and RM664,821.21 as payment of legal fees.

1MDB, through its writ of summons, claimed that the two defendants jointly and severally violated their statutory duties to the company on behalf of Najib and businessman Low Taek Jho or Jho Low and their associates, causing the company to suffer losses amounting to US$1 billion.

Both cases have been fixed for case management on June 1 via video conference in front of high court judicial commissioner Liza Chan Sow Keng.

On May 10, the Finance Ministry confirmed that 1MDB and SRC had filed a total of 22 civil suits to recover assets worth more than RM96.6 billion, including about RM300 million from various local parties.