KUALA LUMPUR (March 25) : A former director and CEO of SRC International Sdn Bhd told the High Court on Monday that he was not aware of SRC International Sdn Bhd’s tie-up with Ihsan Perdana Sdn Bhd (IPSB) in Sept 2014, and only became aware of it in April 2015.

Datuk Mohammed Azhar Osman Khairuddin said he was only aware of the SRC-IHP tie-up after the Malaysian Anti-Corruption Commission (MACC) interviewed him.

Azhar, 69, explained that IPSB was appointed as SRC International’s corporate social responsibility (CSR) partner on Sept 3, 2014, but maintained that IPSB’s appointment was done before his appointment as the company’s director.

“Prior to this, I had no knowledge of the SRC-IPSB Partnership, [or of] the disbursement of, or the existence of, the CSR programme. Datuk Suboh Md Yassin and Nik Faisal Ariff Kamil (then directors of SRC) subsequently informed me that the CSR programmes were executed under (then prime minister) Datuk Seri Najib Razak’s instructions and the funds were urgently required by the government to aid flood victims in Kelantan, Kedah and Perak during that period.

“Additionally, I was informed that IPSB was appointed by 1Malaysia Development Bhd (1MDB) to carry out all CSR initiatives related to 1MDB,” he said, adding that one See Yoke Peng (vice-president of Finance at SRC) confirmed with another person for him that the funds were indeed expended for CSR purposes.

Azhar added that following the MACC interview, he took proactive measures to ensure proper governance and oversight of all future CSR donations by insisting that board resolutions must precede any CSR donations from SRC International.

Furthermore, he also sought that he be included as a signatory on cheques for CSR donations, alongside another SRC International director of SRC, to try to improve corporate accountability.

“After this was resolved, no further transactions happened, so I did not sign any cheques to this effect,” Azhar told the court.

Azhar was testifying as a third-party respondent brought in by Najib in the SRC International US$1.18 billion suit against the former premier.

Should the court find a case against Najib, Azhar, as a third-party respondent who had been brought in by the former prime minister, may be required to bear the losses with others named by the former PM.

Suboh and Nik Faisal were overseas during MACC probe

Azhar told the court that when the MACC was investigating SRC International, Suboh and Nik Faisal were not in the country, and he believed the anti-graft body had interviewed them overseas to assist with the investigations.

He said Suboh and Nik Faisal returned to Malaysia in November 2015 and resumed their roles in SRC. They informed him it was a necessity for SRC to formalise IPSB’s appointment.

“Based solely on the representations made by Suboh and Nik Faisal to me, and the understanding that IPSB was already appointed as a CSR partner by 1MDB, I signed the directors' circular resolution on Nov 24, 2015, confirming the appointment of IPSB.

“Further, I wish to emphasise that the appointment of IPSB as SRC's CSR partner was brought to my attention only after the impugned transactions had already been carried out. Prior to this discovery, I had no knowledge of the appointment of IPSB or the transactions in question,” Azhar said.

Previously in Najib’s criminal trial, there was evidence that SRC International funds to IPSB had made their way to the former premier’s account, which form part of his criminal breach of trust and money laundering charges of RM42 million. Part of the transfer of funds occurred between Dec 26, 2014, and Feb 10, 2015.

Najib is currently serving his sentence of 12 years’ jail (coupled with a RM210 million fine) after being found guilty on all seven counts concerning his SRC International charges by the Federal Court. The sentence has been reduced to six years and a RM50 million fine, following the Federal Territory pardons board’s decision last month.

Return of foreign SRC funds subject to PM

During cross-examination by Najib’s co-counsel Harvinderjit Singh, Azhar told the court that SRC accounts were blocked in 2015, following the probe by the MACC and Swiss authorities.

He agreed that the MACC had probed SRC following the anti-graft body’s investigations on 1MDB, which were widely reported by the media.

Azhar said SRC International, with the Ministry of Finance’s then secretary general of Treasury Tan Sri Mohd Irwan Serigar Abdullah, had bid to resolve the issue of bringing the money back from overseas.

The former SRC International CEO agreed that the company had to take a short-term loan from the government to pay back the Retirement Fund (Incorporated) (KWAP).

In the opening statement to this trial, it was revealed that SRC International was given a total RM100 million loan by the government to prevent a default of the KWAP RM4 billion loan it took, as a result of the freezing of SRC International’s bank account in Switzerland.

When asked by Harvinderjit whether he was aware of the outcome of trying to bring back the funds, Azhar replied that he was not privy to the matter as there were some efforts by the Attorney General to bring them back.

“However, I do not know the conclusion (of these efforts),” he said.

Two earlier witnesses had testified in the trial that more than US$900 million had made its way out from the KWAP loan to questionable fiduciary funds.

When asked several times by Harvinderjit, Azhar maintained that while he was the director and CEO, he had asked Nik Faisal, who was his predecessor, to work on bringing back SRC International funds from overseas, as the firm was suffering losses as a result of the KWAP repayments.

He said the board tried the best it could to bring the funds back, but when the subject was brought up, Nik Faisal would then bring up the issue that bringing in the funds would be subject to the advice from the prime minister (Najib).

He said Nik Faisal claimed that bringing back the fiduciary funds before the maturity date would result in losses.

When asked by Harvinderjit, Azhar disagreed that he (Azhar) was suggesting that Nik Faisal was trying to overrule him in the running of SRC International, but agreed that the board of directors is the higher decision-making body in the company.

The US$1.18 billion suit against Najib and Nik Faisal is one of 16 suits filed by SRC International in May 2021 against several individuals and companies.

The company obtained a judgment against Nik Faisal in November 2021, who has been missing since he left the country in 2018.

The trial continues on Tuesday (March 26) before High Court judge Datuk Ahmad Fairuz Zainol Abidin.