The Malaysian Insight

THE SRC International Sdn Bhd trial today enters the second day of the defence stage, with former prime minister Najib Razak continuing his sworn testimony from the witness stand.

Najib is addressing the court, via a 243-page witness statement, on allegations that he misappropriated RM42 million in public funds.

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

Yesterday, he began his testimony by describing the formation of 1Malaysia Development Bhd and the role of wanted businessman Low Taek Jho, better known as Jho Low.

Najib said he knew Low to be closely acquainted with then Yang di-Pertuan Agong Sultan Mizan Zainal Abidin when 1MDB’s precursor, the Terengganu Investment Authority, was formed in 2009.

The former prime minister described Low as “very influential” in the Middle East, and that he thought the Penang-born financier could help facilitate investment dealings and shareholdings.

Najib denied giving a “veiled direction” to former Retirement Fund Inc (KWAP) chairman Wan Abdul Aziz Wan Abdullah to expedite a RM2 billion loan to SRC International in 2011.

He also denied instructing his late senior aide, Azlin Alias, to meet then KWAP chief executive Azian Mohd Noh at a hotel after work hours in June 2011 to hand over an application letter for a RM3.95 billion loan.

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

Hearing dates for the defence stage have been scheduled till December 19. The defence has yet to say how many witnesses it will call.

Najib’s legal team is led by Muhammad Shafee Abdullah. Attorney-General Tommy Thomas leads the prosecution, while justice Mohd Nazlan Mohd Ghazali presides.

The Malaysian Insight brings you today’s proceedings live:

3.58pm: Judge Nazlan has a meeting to attend. 

Court adjourns for the day and will continue on Monday

3.55pm: Wan Aizuddin: Why US$620 million specifically?

Najib: I didn’t decide on that. I told Azlin to return RM2 billion.

3.52pm: Najib says he instucted Azlin to liaise with Nik Faisal to return the unused funds.

“I can’t recall the exact date but was told that in August 2013, the unused US$620 million was transferred to Tanore.”

3.50pm: “I, therefore, decided to return almost all of the donations that were not spent and just keep a portion of it. 

“Finally, approximately US$620 million was returned to the fund’s lender, Tanore Finance Corp, and the remaining RM162 million was transferred to a new accounts that I opened in August 2013,” Najib tells court.

3.46pm: Wan Aizuddin asks Najib if he used all the funds received in 2013. Najib says, ‘no’. 

Najib says he was told that until July 2013, there was a huge sum in his account surpassing RM2.1 billion. 

He says he was uncomfortable and worried about having such an amount in his account.

“I felt uncomfortable having such a huge amount in my account because I was worried that if the information was leaked, it would be spinned and used for politics.”

3.38pm: Wan Aizuddin: What is Datuk Seri’s opinion on the fact that the money was transferred by Tanore? 

Najib: At that time, I believed that Tanore was a company connected to the Saudi government or the Saudi royal family, as stated in the letter dated March 1, 2013.

3.35pm: Najib says he was shown a letter dated March 1, 2013, which was said to be from the legal representative of King Abdullah of Saudi Arabia. 

Najib said the letter stated that King Abdullah had given him a sum of US$800 million as a gift, and that he could spend it at his discretion.

3.31pm: Najib denies knowing of the following transactions in 2013 into his 694 account. He says these monies were spent on CSR projects.

Transactions for 694 account in 2013.

22.3.2013 
US$50,000,000.00 (RM155,000,000.00)
From Tanore Finance Corp

22.3.2013 
US$50,000,000.00 (RM155,000,000.00)
From Tanore Finance Corp

22.3.2013 
US$50,000,000.00 (RM155,000,000.00)
From Tanore Finance Corp

26.3.2013 
US$60,999,988.00 (RM188,001,963.02)
From Tanore Finance Corp

28.3.2013 
US$75,000,000.00 (RM231,150,000.00)
From Tanore Finance Corp

28.3.2013 
US$44,999,988 (RM138,824,962.98)
From Tanore Finance Corp

8.4.2013 
US$50,000,000.00 (RM152,500,000.00)
From Tanore Finance Corp

9.4.2013 
US$100,000,000.00 (RM304,000,000.00)
From Tanore Finance Corp

10.4.2013 
US$200,000,000.00 (RM602,000,000.00)
From Tanore Finance Corp

Total received in 2013 : 
US$680,999,976.00 (RM2,081,476,926.00)

3.24pm: Former prime minister says these monies were spent on CSR projects.

3.20pm: Najib also denies knowledge of the following transactions in 2012 until he was questioned by MACC and his lawyers got the documents from AmBank.

3.1.2012 
US$69,999,988.00 (RM218,889,962.48)
From Blackstone Asia Real Estate Partner

13.3.2012 
US$24,999,988.00 (RM75,124,963.94)
From Blackstone Asia Real Estate Partner

25.4.2012 
US$49,999,977.00 (RM151,899,893.67)
From Prince Faisal bin Turki

23.5.2012 
US$24,999,988.00 (RM 7,874,962.62)
From Blackstone Asia Real Estate Partner 

26.6.2012 
US$24,999,977.00 (RM78,999,889.40)
From Prince Faisal bin Turki

15.8.2012 
US$24,999,977.00 (RM77,499,891.50)
From Prince Faisal bin Turki

22.10.2012
US$19,999,988.00 (RM60,599,963.64)
From Blackstone Asia Real Estate Partner

31.10.2012
US$4,999,988.00 (RM15,149,963.64)
From Blackstone Asia Real Estate Partner

20.11.2012

US$24,999,988.00 (RM75,749,963.94)
From Blackstone Asia Real Estate Partner

Total received in 2012: 
US$269,999,985.59 (RM831,919,489.84)

3.12pm: Wan Aiizuddin: How were these funds spent?

Najib: In general, I used these funds for CSR initiatives.

3.08pm: Najib says he became aware of the following transactions in account 694 only after he was questioned by MACC.

24.2.2011 
US$10,000,000.00 (RM30,449,929.97)
From Prince Faisal bin Turki

14.6.2011 
US$10,000,000.00 (RM30,179,909.46)
From Prince Faisal bin Turki

19.8.2011 
US$49,999,988.00 (RM148,749,964.30)
From Saudi Arabia Ministry of Finance

29.11.2011
US$29,999,988.00 (RM94,949,962.00)
From Saudi Arabia Ministry of Finance

Total received in 2011: US$99,999,976.00 (RM304,329,765.73)

3.02pm: Najib says he was not aware of Joanna’s communications with Jho Low from 2011 to 2013 that the former AmBank executive had testified earlier in the trial.

2.56pm: Wan Aizuddin: How do you monitor the balance of account 694? 

Najib: Datuk Azlin will keep me informed. He will tell me that money had been deposited into the account from overseas in US dollars.

2.52pm: Najib says he knew Nik Faisal was made 1MDB chief investment officer but can’t recall when he was informed about it.

Najib: I never knew Nik Faisal had worked with Jho Low. I knew about it only after it was reported in the news.

2.44pm: Najib denies knowing Nik Faisal personally. He says Azlin told him that Nik Faisal is trusted.

2.42pm: Defence lawyer Wan Aizuddin asks Najib when he was informed that Nik Faisal was appointed authorised person for account ‘694’.

Najib says he doesn’t remember exact date, but he was informed by his aide, Azlin, that he chose Nik Faisal. 

Najib: I don’t remember sometime around 2011, shorly after the account was opened.

2.34pm: Najib explains his duties as prime minister and finance minister.

2.32pm: Najib says he has never dealt nor communicated in person with Joanna Yu, Daniel Lee and Krystal Yap as ‘relationship managers’ for account ‘694’.

2.28pm: Court resumes.

1.08pm: Court breaks for lunch.

1.07pm: Wan Aizuddin asks Najib if Cheah informed to Azman Hashim (AmBank Group chairman) and Zeti Akhtar Aziz (BNM governor at the time) about the accounts and expected donations.

Najib: No, I was not informed. But at one point when I was talking with Tan Sri Zeti, I directly told her about the donation that what I was expecting. She told me that she was informed about it.

1pm: When asked if he applied for a credit card, Najib replies that he can’t remember but Cheah said Ambank gave credit cards to all “VIP” customers.

12.57pm: Cheah told Najib since he was expecting for huge amount in foreign currency, reports and permission must be obtained from Bank Negara.

Najib says he told Cheah to ensure that all rules and regulations were complied with and necessary reporting made.

Two accounts were opened under Najib’s name, ending in -694 and -481.

12.50pm: Cheah met Najib at his Langgak Duta residence in mid-January 2011 where he signed some forms to open the account.

Najib says he told Cheah that he was expecting to receive donations about US$100 million to US$200 million from the Saudi royal family.

12.47pm: Najib says by end of 2010, Low told him that the donation will be coming soon.

Najib’s late private secretary suggested that he open a bank account to receive the funds, which he did as he wanted to use the funds for CSR initiatives.

Low recommended Ambank where he introduced Najib to Cheah Teck Kuang, the Ambank managing drector. Najib agreed and told Low to make the necessary arrangements.

12.38pm: Najib says he received the Kiswah – the cloth covering the Kaaba – from King Abdullah as a gift, and still has it.

12.32pm: Weren’t you shocked by the huge amount, Wan Aizuddin asks Najib.

“It may seem like a lot, but the Saudi royal family are known for their generous nature,” says Najib.

“They’ve donated large sums to various US foundations, including the Clinton Foundation, and other countries, like Egypt, Pakistan and Palestine, as part of (Saudi Arabia’s) foreign relations and diplomatic policy.”

12.27pm: Since Low acted as the liaison in this matter, Najib says he believes it was the businessman who managed the donations on behalf of the Saudi royal family.

He adds that both he and Ambank received letters from Low regarding the donations.

Wan Aizuddin: When Low raised the matter of donations for the first time in 2010, were you notified of the amount?

Najib: I was not told of a specific amount, but Low said it could be US$100 million to US$200 million (RM418 million to RM836 million).

12.19pm: Najib says in mid-2010, Low informed him that King Abdullah had agreed “to support me in the form of personal donations”.

“At that time, I was not told what the amount was, or the date, only that the donations would be handled by King Abdullah’s son.”

From 2011 to 2014, Najib says, he received huge sums that he believed were donations from the Saudi king.

12.01pm: Wan Aizuddin asks when Najib was first introduced to Jho Low.

Najib: I first met him around 2007. He was introduced to me by my stepson, Riza Aziz. I believe Riza met Low through the latter’s brother, Tiek Sin. I was also told that Low had private investment funds.

Low was the one who arranged my meeting with King Abdullah Abdulaziz Al-Saud during my visits to Riyadh and Jeddah, adds Najib.

11.56am: Do you have knowledge of 12 transactions where funds in SRC International’s bank account, amounting to RM123 million, were transferred to IPSB, Wan Aizuddin asks Najib.

The former prime minister replies that he “had no knowledge of these transactions at the material time”.

The transactions are among the following 14:

1) RM20 million from SRC International’s account ending with “650” to the entity’s account ending with “736”;

2) Cheque No. 563616, dated December 15, 2014, for RM20 million made out to IPSB from SRC International’s “736” account;

3) RM40 million from SRC International to Gandingan Mentari Sdn Bhd on December 24, 2014;

4) RM40 million from Gandingan Mentari to IPSB on December 24, 2014;

5) RM39.7 million from SRC International to Gandingan Mentari on January 9, 2015;

6) RM40 million from Gandingan Mentari to IPSB on January 9, 2015;

7) RM5 million from SRC International to Gandingan Mentari on February 5, 2015;

8) RM5 million from Gandingan Mentari to IPSB on February 5, 2015;

9) RM5 million from SRC International to Gandingan Mentari on February 6, 2015;

10) RM5 million from Gandingan Mentari to IPSB on February 6, 2015;

11) RM10 million from SRC International to Gandingan Mentari on February 13, 2015;

12) RM10 million from Gandingan Mentari to IPSB on February 13, 2015;

13) RM3 million from SRC International to Gandingan Mentari on April 9, 2015; and,

14) RM3 million from Gandingan Mentari to IPSB on April 9, 2015.

11.34am: Court resumes. Najib is back on the stand.

11.17am: Court takes a 10-minute break.

10.51am: Wan Aizuddin asks whether Najib was informed about the appointment of Ihsan Perdana Sdn Bhd (IPSB) by SRC International as a share partner, and a RM250 million allocation to run corporate social responsibility programmes.

Not at all, says Najib.

“I knew IPSB was doing CSR work for 1MDB and Yayasan Rakyat 1Malaysia, but I was never told that they were also appointed by SRC International to carry out CSR work.”

10.28am: Wan Aizuddin asks whether matters related to SRC International’s investments and operations were reported to Najib.

Najib: In some situations, I met (former SRC International CEO) Nik Faisal (Ariff Kamil) and he gave simple briefings on matters related to SRC International and its operations. After Azahar Osman Khairuddin took over as CEO and president, I met him several times (to talk about) SRC International. Nik Faisal played out both SRC International and me.

10.11am: Wan Aizuddin asks whether Najib was aware of the KWAP investment panel’s approval on March 20, 2012 of a RM2 billion loan for SRC International.

Najib said he was informed about it later.

“I was also informed that SRC International had appealed to KWAP to allow the entire loan to be withdrawn at once.”

9.59am: The lawyer cites a letter from SRC International.

Wan Aizuddin: A letter from SRC International states, in Paragraph 2, that “the finance minister has hereby approved and advised that the company shall procure from KWAP a further RM2 billion term financing facility based on the same terms and conditions as Facility Agreement 1, and secured by a second government guarantee. The company’s board of directors has also approved and endorsed this”. What are your comments?

Najib: I do not think I gave an approval. However, I remember that I informed (former KWAP chairman) Wan Abdul that the importance of SRC International would be well communicated if KWAP agreed to lend a further RM2 billion on the same terms as the first loan. This, I believe, happened at a meeting I attended with Wan Abdul, Azian and Mohd Irwan Serigar Abdullah in mid-March 2012 after KWAP agreed to provide financing.

Wan Aizuddin: Paragraph 5 of the SRC International letter (P383) states that the initial investment by SRC International was made with the original RM2 billion facility. The letter continues to show that all such investments “are approved and endorsed by the board of directors of the company and… prime minister”. Are you aware of the SRC International investment as stated in this paragraph, and did you give your consent for that investment?

Najib: I was informed about investments by SRC International in Malaysia, the joint venture with Aabar, and other initiatives by SRC International in general. Other investments are the same as outlined in the cabinet paper (D527B). At the time P383 was issued, the cabinet itself had taken note of the matter.

9.55am: The lawyer asks about SRC International’s second RM2 billion loan from KWAP.

Wan Aizuddin: SRC International applied for another RM2 billion loan from KWAP on March 13, 2012, in a letter to (then CEO) Azian. This letter was sent to KWAP via email by Terrence Geh to KWAP via Azian on March 14, 2012. Are you aware of these documents?

Najib: No. I was, however, informed that SRC International had applied for an additional loan of RM2 billion from KWAP based on a second government guarantee.

Wan Aizuddin: How did you come to know of SRC International’s request for a second RM2 billion loan from KWAP?

Najib: I don’t remember specifically.

9.20am: Defence lawyer Wan Aizuddin Wan Mohamed tells judge Nazlan that Shafee will not be present at the start of today’s proceedings.

Wan Aizuddin: Can you refer to D526. What do you know about the meeting between Nor Mohd Yakcop and Finance Ministry officials as stated in the Treasury memo?

Najib: The only thing stated in D526 is Nor Mohd Yakcop and the Finance Ministry didn’t support giving government grants as much as RM650 million to SRC International, and decided otherwise on government guarantees for an additional RM2 billion to be given to SRC International. I was satisfied with it, and on that basis, agreed to recommendations by the second finance minister.

9.14am: Court is in session. Najib takes the stand.

9.09am: A-G Thomas and deputy public prosecutor V. Sithambaram are in the courtroom. Najib is seated in the public gallery. The former PM’s lead counsel, Shafee, has yet to arrive. – December 4, 2019.