KUALA LUMPUR (March 26): Datuk Shahrol Azral Ibrahim Halmi, a director of SRC International Sdn Bhd, told the High Court that Datuk Seri Najib Razak had “absolute power” in decision-making in the state-owned company, as all matters brought to the board had in fact been approved and endorsed by the former prime minister.

Shahrol, in his witness statement before the court testified that Najib was “actively controlling” and “administering” SRC through former CEO Nik Faisal Arif Kamil.

He outlined that Nik Faisal would usually table papers or proposals to SRC’s board of directors for their approval. He said Nik Faisal would also follow up on action for SRC’s projects and report directly to Najib.

Shahrol said that he and other SRC directors were "obliged under the law and by practice to comply and implement" Najib’s decisions which were represented in board meetings via Nik Faisal.

“All the directors are compelled to comply and implement the decisions and instructions of Najib as represented by Nik Faisal (to the board) through letters or documents signed by Najib. Whatever our comments are, Nik Faisal will tell us that the projects or matters had already been approved and endorsed by Najib and/or the government,” he said, adding that Nik Faisal was the proxy between Najib and SRC’s board of directors.

Shahrol was testifying at the SRC International civil suit, where the company is suing Najib and Nik Faisal (currently at large) over a RM4 billion Retirement Fund Inc (KWAP) loan which was disbursed in the second half of 2011 and first half of 2012 to SRC. As reported in this trial, a sum of RM3.6 billion was immediately transferred out when the funds came in. Shahrol had also previously testified in Najib's 1MDB-Tanore criminal trial.

Prior to this, two other witnesses - former BSI banker Kevin Swampillai and liquidator for SRC BVI Angela Barkhouse - had testified that the monies had been transferred to questionable fiduciary funds, resulting in losses.

Shahrol, who also served as former CEO of SRC’s parent company 1Malaysia Development Berhad (1MDB), said that Najib had “absolute power’ with regards to decisions and directions for the use of the RM4 billion loan.

“He had absolute power to make all decisions on the direction, administration and operations of SRC International, including how the RM4 billion from KWAP (Retirement Fund Incorporated) would be utilised and disbursed. As one of the many directors of the board, I did not have the power to make any decision over the RM4 billion.

"All the important decisions involving such a colossal sum of money, ie the RM4 billion loan from KWAP, were made by Najib," he said of his nine-and-a-half-month tenure as SRC director from August 2011 to May 2012.

According to the witness statement, Shahrol claimed that Nik Faisal had told him that the RM4 billion loan to SRC was for investments in coal mines in Indonesia and Mongolia, which turned out to be false and misleading.

“Najib and Nik Faisal made false and misleading representations to SRC directors including me, regarding the true nature and purpose for the disbursements of the RM4 billion funds from the KWAP loans,” he said, adding that he denies any wrongdoing on his part.

SRC International filed the US$1.18 billion suit against Najib and Nik Faisal in May 2021. Initially, the suit also named Datuk Mohammed Azhar Osman Khairuddin, Shahrol, Tan Sri Ismee Ismail, Datuk Suboh Md Yassin and Datuk Che Abdullah @ Rashidi Che Omar as defendants, but they were subsequently dropped, only for Najib to bring them back again as third parties.

SRC International has obtained a judgement in default against Nik Faisal, who was named as Najib’s proxy.

In the opening statement for the trial, lead co-counsel Datuk Lim Chee Wee said that out of the total KWAP loan of RM4 billion, a sum of US$120 million made its way to Najib’s bank account.

The trial is before High Court judge Datuk Ahmad Fairuz Zainol Abidin. 

https://www.theedgemarkets.com/node/705991