The Malaysian Insight

THE SRC International Sdn Bhd trial reaches the defence stage today with former prime minister Najib Razak giving a sworn testimony from the witness stand.

He will address the court on the allegations that he misappropriated RM42 million in public funds.

The 66-year-old accused is the first defence witness, as required by law. 

Najib was ordered to enter his defence on November 11, when presiding judge Mohd Nazlan Mohd Ghazali ruled that the prosecution has established a prima facie case for Najib’s seven criminal charges – three counts of criminal breach of trust, three counts of money-laundering and one count of power abuse.

The charges in the SRC International case are linked to RM4 billion in loans issued to the entity in 2011 and 2012, for which Najib is accused of receiving RM42 million in his accounts in 2014 and 2015.

Today, Najib will read aloud his witness statement, which will be followed immediately with examination-in-chief by the defence, led by Muhammad Shafee Abdullah.

After that, Najib will be cross-examined by the prosecution, led by Attorney-General Tommy Thomas.

The prosecution’s case in the SRC International trial saw 57 witnesses testifying on 57 hearing dates between April 3 and August 27.

Hearing dates for the defence stage has been schedule from today until December 19.  The defence has yet to indicate how many witnesses it will call.

The Malaysian Insight brings you today’s proceedings live:

5.00pm: Court adjourns until tomorrow.

4.57pm: Wan Aizuddin presents Najib with document exhibit P328A and asks if he signed it.

Najib : I believe that the original document was not presented in court. So, I cannot confirm the authenticity of the document. If I have signed the document, that would be the case referred to me through Bahagian Menteri Kewangan Diperbadankan in line with the usual procedure.

3.36pm: Wan Aizuddin: Did you agree with the appointment of Nik Faisal Ariff Kamil and Vincent Koh Beng Huat as the initial directors of SRC International? 

Najib: No. I was not informed of this and did not approve anything.

3.35pm: Wan Aizuddin: Afidah Azwa and Maliami Hamad testified they were forced to prepare a memorandum for cabinet approval.

On August 15, 2011, they were ordered to ensure that the cabinet paper was available for discussion in the cabinet meeting scheduled for August 17, 2011.

The entire process seems like it was rushed. Information given to Afidah of the SRC International could not establish which of it was against common pratices of the Bahagian Pelaburan Khas Awam (BPKA). What is your view on this? 

Najib: It is something to note that on August 12, 2011, regarding the loan to be made for SRC International , it had been discussed since June 2011.

I found that any information provided by SRC International to KWAP must be communicated to the Ministry of Finance first when the latter’s senior management agrees with the withdrawal of Malaysia Government Securities (MGS).

The decision to issue MGS was made before August 12, 2011. No complaints have been made regarding the previous process of producing MGS in a hurry.

Concerning the evidence, Afidah and Maliami are unlikely to have any knowledge of these matters, and I understand their perceptions / impressions of such actions.

However, I will not compromise on the integrity of the process. With that said, I didn’t give any directions to any member of the Treasury to expedite this matter with the cabinet as implied by Afidah, who was mistaken and inadvertently called SRC International the ‘PM’s company’. One of my only interests in SRC International is that it was for national interests.

3.17pm: Wan Aizuddin: Are you aware of the Treasury’s approval in the memo?

Najib: It is very possible that I am aware, even though I have no specific memory about this document. It was told to me by someone either from the Treasury or by Nor himself.

3.12pm: Wan Aizuddin: When did you begin to realise that SRC International intended to apply for government guarantee, for the purpose of repaying the proposed loan RM2 billion from KWAP?

Najib: I believe it was on or about when SRC International issued the letter to the Ministry of Finance applying for government guarantee as in (D520). 

Wan Aizuddin: Was the goverment guarantee as in (D520) brought to your attention? 

Najib: Not in detail. I have been told that though SRC International applied for government guarantee, because KWAP requires assurances by the government. This matter was referred to Nor Mohd Yakcop as the minister in charge of SRC International at that time.

2.37pm: Court resumes after lunch break. Najib is back on the witness stand.

1.04pm: Court adjourns for lunch.

1.03pm: Wan Aizuddin: The documentary evidence submitted indicates that SRC International was established with two individuals as shareholders and its directors are Nik Faisal Ariff Kamil and Vincent Koh Beng Huat. It was permanent until August 2011. Do you know about this?

Najib: No, I don’t know anything about this. I’ve never met Nik Faisal or Vincent Koh Beng Huat regarding SRC International.

Wan Aizuddin: The documentary evidence provided indicates that the stocks at SRC International was only transferred to 1MDB at the end of 2011. Are you aware of this?

Najib: No, I don’t know about this and it is not consistent with what 1MDB has shown me.

12.50pm: Wan Aizuddin: Did you at any stage demand the entry of these provisions into the M&A of SRC International?

Najib: No, I’m not involved or consulted at that level. I found that in the letter dated June 3, 2011 (P364) the SRC International states that its establishment has been approved by EPU minister Nor Mohd Yakcop.

12.46pm: Wan Aizuddin: This court has heard evidence that the M&A of SRC International (P15) has the provisions contained therein intended give the prime minister exclusive power, especially article 67 states the appointment and removal of directors formally with the approval of the prime minister and article 116 contains certain things that cannot be accomplished by the board without the prime minister’s approval.

Are you involved in the process leading to P15 being implemented or referred to in any way?

Najib: No. I was not consulted and explained about the establishment of SRC International until then.

After viewing the documents for setting up SRC International, I found out that the company was established through B&M Consultancy Services Sdn Bhd and Lim Poh Seng, who is also 1MDB company secretary.

I also find that the provisions of article 67 and article 116 of P15 is a repetition of article 68 and article 117 of the M&A 1MDB.

Perhaps this is why article 67 and article 116 are included in P15.

12.44pm: Defence counsel Wan Aizuddin Wan Mohamad: Are you involved in setting up SRC International on January 7, 2011?

Najib: No. As I mentioned, that is within the scope of the Economy Planning Unit. I believe that 1MDB had reported to EPU about the establishment of SRC International. However, I was only aware of the company then.

12.10pm: Court is in session.

11.43am: Najib supporters swarm the canteen to take photos with him.

11.40am: Court in recess.

11.16am: Shafee: How are other 1MDB directors appointed?

Najib: As stated in the note dated 28 July 2009, which was reported in the cabinet on 29 July 2009, directors of 1MDB are the same ones under the TIA. All these directors are very experienced and qualified individuals, who also served in other GLCs.

I don’t see any reason to change the composition of the board, where the existing one has been involved in the operations of the company.

11.13am: Najib says Ismail Ismee, Mohd Bakke Salleh, Azlan Zainol and Shahrol Azral Ibrahim Halmi were TIA directors before it was taken over by the federal government.

11.08am: Shafee: Does Jho Low have any role in TIA before being taken over by the federal government?

Najib: Jho Low was, at that time, a close acquaintance of Sultan Mizan and his sister Tengku Rahimah Almarhum Sultan Mahmud.

The concept of TIA, as it I understand, comes from discussions between Jho Low and the sultan, and the Terengganu government.

I understood that Jho Low was elected as advisor to the chairman of the TIA board, who was the sultan.

11am: “The state government and MBTI could not agree with IMTN’s terms even if they have been issued.

“As a result, on 8 August 2009, the cabinet approved for the federal government to take over TIA.

“It is a decision that has been reluctantly made to protect the Terengganu government and the Agong, and also to avoid adverse impact on the Malaysian bond market globally.

“It is clear in the three options that the cabinet considered. It has been shown in the cabinet minutes dated 26 June 2009, which the cabinet has accepted the position of the finance minister to agree with option two.

“That is, that TIA will still be under the state government but with the support of the federal government,” says Najib.

10.56am: “As early as 2009, the Terengganu government, the Menteri Besar Terengganu Inc (MBTI) and the sultan, at the time was the Yang di-Pertuan Agong, Sultan Mizan has decided to establish a sovereign wealth fund with a capital of RM11 billion named as Terengganu Investment Agency Berhad (TIA).

“These funds should have been derived from oil royalty debt (to Terengganu) of RM6 billion and the remaining balance will be earned through Islamic Medium Term Notes (1MTN) issues of RM5 billion such as proposed to be guaranteed by the federal government.

“At that time, I was invited into my capacity as finance minister to facilitate the issuance of IMTN,” says Najib.

10.45am: Najib is going through the cabinet portfolios he held over the years.

10.30am: Najib takes the stand. He will be speaking in Malay as his statement is also in Malay.

10.15am: Shafee ends his statement by saying the defence will pray for an order that Najib be acquitted and discharged of all seven charges as the same will be merited given the above.

Shafee says the team is ready to proceed with Najib’s defence.

He adds there may be some typo errors, given the circumstances that at least seven of them barely slept the last 48 hours.

10.13am: Shafee says the defence will ultimately submit that the evidence as a whole will establish:-

(a) that Section 23(4) MACCA applies given that DSN acted in pursuance with  the best interest of the Government of Malaysia vis-à-vis matters involving SRC International;

(b) that there was no misuse of office by DSN;

(c) that there was no corrupt arrangement under which gratification was offered,  solicited or caused to be received by DSN;

(d) that DSN had no interest in SRC International within the ambit and mischief of S. 23  MACCA and his involvement in matters concerning SRC International as identified in the grounds on November 11 were not motivated by and corrupt motive;

(e) the statutory presumption in Section 23(2) MACCA which this honourable court applied has been rebutted on a balance of probabilities based on the evidence as a whole;

(f) that DSN was never an “agent” or “director” of SRC International within the meaning attributed thereto in S. 402A read together with S. 409 Penal Code;

(g) DSN was not in control of SRC and was certainly not entrusted with dominion over funds of SRC International either directly of indirectly;

(h) DSN did not misappropriate funds of SRC International either directly or indirectly;

(i) DSN did not act dishonestly within the meaning of S. 24 Penal Code;

(j) the RM42 million was not received by DSN as alleged in the AMLA charges;

(k) the prosecution have failed to establish the predicate offences which make up the illegal activity it is said the RM42 million is derived from;

(l) the objective circumstances justify that there was reasonable excuse for DSN  to believe that the funds in his account were not the proceeds of illegal activity; and

(m) the evidence as a whole supports inferences favourable to DSN which this honourable court should prefer over any other inference to the contrary.

(n) reasonable doubt in relation to the ingredients of the offences which make up the seven charges.

10.10am: He says Najib was not involved in any corrupt arrangement involving funds of SRC International and did not solicit any bribes from any person. The RM42 million transferred into his account was done without his knowledge or involvement and was not a form of gratification related to any act of Najib vis-à-vis SRC International.

10.06am: “Throughout 2011 to 2015, Najib was of the understanding that matters relating to the opening of his CSR accounts, the remittances into the accounts and supporting documents for the same had been duly reported to Bank Negara Malaysia and Zeti Akhtar Aziz and this fortified his belief that nothing sinister was taking place.

“Najib’s utilisation of the funds from the accounts by way of cheques from 2011 to 2015 were almost all for CSR related matters to promote political, social, charitable causes and community related projects.

“Najib, therefore never intended to wrongfully gain or enrich himself with any of those funds and never intended to cause wrongful harm to any party.

“Najib was being misrepresented on about the transactions and actual balances in his accounts in 2013 to 2015 and his accounts were being manipulated by third parties without his knowledge and approval,” says Shafee.

9.40am: Before Shafee begins his opening speech, he gave a letter to Nazlan requesting to be excused earlier.

Shafee says he is invited to attend an event in Universiti Malaya later today and the letter only reached him yesterday.

9.31am: Shafee says the defence has prepared a statement for Najib, and counsel Harvinderjit Singh will be in court soon.

9.30am: Nazlan enters the court room. Court in session.

9.20am: Prosecution, including Thomas and ad hoc prosecutor V. Sithambaram are in court. Shafee just arrived.

8.54am: Najib arrives at the Kuala Lumpur High Court. He is greeted at the lobby by a group of supporters. – December 3, 2019.