KUALA LUMPUR (June 24): SRC International Sdn Bhd’s former director Datuk Suboh Md Yassin said that Datuk Seri Najib Razak had never been invited to attend board meetings despite being the “adviser emeritus” of the company.

Testifying at the High Court here in SRC’s US$1.18 billion (RM5.58 billion) civil suit against Najib, Suboh said that Najib was not invited to the meetings as the then-prime minister had confidence in the board's then-executive director Nik Faisal Ariff Kamil’s running of the company.

According to SRC’s Memorandum and Article of Associations (M&A), the board has to comply with Najib’s views in material and strategic issues involving the company.

Under cross-examination from Najib’s lawyer Tan Sri Shafee Abdullah, Suboh said that he had no recollection of Najib being invited to join board meetings.

Suboh also said that he was not aware of any attempt from board members to contact Najib or any attempt to meet with Najib. He also said that he had not made any personal attempt to meet Najib to tell him of the ongoings in SRC.

"If the board of directors does not tell the prime minister, how would he be educated and enlightened to the true state of affairs of SRC?" Shafee quipped during the cross-examination.

Under questioning from Shafee, Suboh also agreed that there were criminal elements and forgery in the running of SRC.

He said that Nik Faisal had misrepresented facts to the board about the repatriation of SRC funds which had been siphoned out of the company to sham investments.

Some RM3.6 billion from a RM4 billion Retirement Fund Inc (KWAP) loan to SRC was transferred to an overseas bank for a “purported investment”.

Shafee: I have proved to you, and you will agree with me, that there’s a lot of forgery going on in the management of SRC?

Suboh: Yes.

Shafee: Do you agree with me that Nik Faisal did not repatriate the funds despite promising the board he would do so?

Suboh: Yes.

Suboh also agreed to Shafee’s suggestion that there were “rogues” running the show in SRC.

On Nov 3, 2011, Bank Negara Malaysia (BNM) had granted permission to SRC to transfer the RM1.8 billion from the first tranche of the KWAP loan to SRC British Virgin Islands (SRC BVI), a shell company under SRC, on condition that the sum was to be used to acquire specific overseas companies as identified in the energy and resources sector; that the RM1.8 billion was to be deposited with a licensed local bank; and that the sum was only to be transferred to SRC BVI after investment negotiations with these overseas companies were concluded.

This was not complied with by the SRC management and Nik Faisal. No due diligence was carried out on these overseas companies prior to the purported investment activities being carried out. The purported investment activities were a departure from the nature of business and the objectives of SRC, and the money was transferred out to an overseas account before any investment negotiations were concluded.

Najib had allegedly disregarded the (conditions of the) first permission by BNM through resolutions he had passed in SRC, as he was a shareholder through the Ministry of Finance Inc (MOF Inc).

The second tranche of funds was transferred on April 6, 2012, and BNM had again granted permission for SRC to transfer the second RM1.8 billion from the second tranche of funds to SRC BVI. BNM had set another list of conditions such as: the sum was to be used for the energy and natural resources industry, but exclude oil and gas; SRC BVI was to deposit the funds in a foreign currency account with BSI Bank and Julius Baer; (and that) the sums were to only be transferred out from the bank after negotiations on these investments had been concluded.

However, money to the tune of US$864.5 million was transferred to SRC BVI even before the board of SRC had had the chance to pass the resolution on the utilisation of the funds, and before BNM’s second permission had been granted.

It is from this money that SRC claims that US$120 million had entered Najib’s personal bank account in this case.

Besides Najib, SRC is also suing Nik Faisal. SRC alleges that Najib had abused his power and obtained personal benefits from the company’s funds, as well as misappropriated the funds.

SRC wants a declaration from the court that Najib is liable for the company’s losses due to his breach of duties and trust, and for Najib to pay the US$1.18 billion in losses it had suffered, together with damages for breaches of duties and trust. SRC also wants an order for Najib to compensate the company for the US$120 million that allegedly went into his bank account.

The SRC lawsuit had initially included Suboh, together with other SRC directors at that time - former 1MDB director Tan Sri Ismee Ismail, and former SRC directors Datuk Mohammed Azhar Osman Khairuddin and Datuk Che Abdullah @ Rashidi Che Omar - as defendants in the case, but later dropped them.

Najib, however, brought them back as third parties in the suit. A defendant can seek to do so in order to claim contribution, indemnity, or any remedy which is claimed by the plaintiff.

In the meantime, SRC has obtained a judgement in default against Nik Faisal, who was named as Najib’s proxy, in the civil suit. Nik Faisal is currently at large.

Najib, meanwhile, has been in jail since Aug 23, 2022. He was sentenced to serve a 12-year jail sentence and fined RM210 million after being convicted of misappropriating RM42 million of SRC’s funds. However, his jail sentence was recently reduced to six years, while the fine was cut to RM50 million by the Pardons Board.

The trial is held before judge Datuk Ahmad Fairuz Zainol Abidin.

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