In SRC International’s US$1.18b civil suit against Najib, court told evidence will prove ex-PM manipulated to procure millions from country’s pension fund to enrich himself

KUALA LUMPUR, March 5 — Counsels acting for SRC International Sdn Bhd in its US$1.18 billion (RM4.9 billion) civil suit against Datuk Seri Najib Razak said today evidence in court will prove the former prime minister manipulated to procure a whopping RM4 billion loan from the country’s pension fund to enrich himself of US$120 million, causing losses to the company and the Malaysian people at large.

The suit, in relation to an alleged breach of trust and breach of statutory duty involving the RM4 billion Retirement Fund Incorporated (KWAP) loan to SRC International when Najib was prime minister, is being heard before the Commercial High Court.

When reading the opening statement, lead counsel for SRC International Datuk Lim Chee Wee said the plaintiff will demonstrate that Najib wielded supreme authority over the company as a public officer and abused his power knowing full well that he was doing so or being recklessly indifferent to the limits of his public power authority.

“SRC became a vehicle victim of a large-scale, multi-jurisdictional fraud orchestrated by the first defendant, through multiple wrongdoings in his multiple roles of a public officer as prime minister and minister of finance, advisor emeritus of SRC and in truth a shadow director,” he told judge Datuk Ahmad Fairuz Zainol Abidin.

Highlighting the outflow of funds from SRC through layered transactions, Lim said a portion of the RM4 billion loan from KWAP made its way to BSI Bank Singapore, followed by Enterprise Emerging Market Fund in Curacao and then to Blackstone Asia Real Estate Partners Ltd in the British Virgin Island, before a sum of US$120 million made its way back to Najib’s bank account.

Lim said contemporaneous documents and events also demonstrate how Najib abused his role as prime minister and finance minister to push through and expedite the requisite approvals for the loans subsequently granted by KWAP.

He further contended that how Najib acted primarily together with Nik Faisal Ariff Kamil — then company chief executive who has since absconded — to perpetrate fraud and participated in dishonest acts resulting in injury to the company.

“Further and critically, the first defendant (Najib) is the benefactor of the outflow of funds from SRC through the layered transactions into his personal account, to the tune of US$120 million, whereas Nik Faisal has received US$2 million,” he said.

Co-lead counsel P. Gananathan said the court will also hear evidence that the SRC International board of directors were neither able to exercise discretion nor judgment, but instead accustomed to act in accordance with the direction of the first defendant, Najib.

He also said evidence will demonstrate that the SRC International directors were playing a subservient role whereby they had effectively surrendered the discretion to decide to Najib.

“The peculiarity of the present case is that the influence and directions that the first defendant imposed on the board of SRC through MOF Inc as finance minister is not confined to a breach of fiduciary duties.

“In seeking to influence and direct the board of SRC, he acted in abuse of his powers,” he said.

Throughout the hearing, Gananathan also said SRC International will seek to demonstrate how the various purported investment activities were in substance and effect shams, illegitimate and or fraudulent schemes that were conceived and put into motion by Najib and Nik Faisal.

“The court will hear from the testimony of a former officer of BSI Bank as to how fiduciary funds were used to facilitate the flow of money and determine the structure of the transaction to obscure the final destination of those funds.

“The court will also hear from the liquidator of SRC’s subsidiaries in BVI as to the lack of legitimacy of the investments that were undertaken on behalf of SRC and the layering that was employed in a complex structure to avoid detection,” he said.

Lawyers Tan Sri Muhammad Shafee Abdullah and Harvinderjit Singh are acting as counsel for Najib.

Former Singapore-based banker Kevin Michael Swampillai is set to testify as the first witness.

Swampillai was previously an employee of BSI Bank Singapore as the bank’s head of Wealth Management Services prior to his resignation.

Imprisoned since August 23,2022, Najib is serving his 12-year jail sentence and RM210 million fine for his conviction over the misappropriation of SRC International’s RM42 million funds, which has recently been reduced to six years of jail and RM50 million fine by the Pardons Board.

SRC, under its new management, had filed legal action against Najib and its former directors Datuk Suboh Md Yassin, Datuk Mohammed Azhar Osman Khairuddin, Nik Faisal Ariff Kamil, Datuk Che Abdullah @ Rashidi Che Omar, Datuk Shahrol Azral Ibrahim Halmi and Tan Sri Ismee Ismail in May 2021.

However, later, it removed six names from the suit and retained Najib as defendant.

Additionally, Najib has brought the former named SRC International directors as third-party respondents.

SRC as a plaintiff in the writ of summons had alleged that Najib had abused his power and obtained personal benefits from SRC International’s funds as well as misappropriated the funds. Najib was SRC’s Emeritus Advisor from May 1, 2012, until March 4, 2019.

SRC International, which is now wholly owned by the Ministry of Finance Incorporated (MoF Inc) is seeking general damages, exemplary, additional and interest, costs and other appropriate relief provided by the court.

SRC International is currently seeking a declaration from the court that Naijib is liable to account for the company’s losses due to his breach of duties and trust.

The company is also seeking an order that Najib pay the US$1.18 billion in losses it suffered, and damages for breach of duties and trust; including an order that Najib compensate the sum of US$120 million as well.