Datuk Seri Najib Razak leaves the Kuala Lumpur Court Complex May 7, 2019. — Picture by Firdaus Latif
KUALA LUMPUR, May 7 — Putrajaya’s guarantee of a second RM2 billion loan that SRC International Sdn Bhd wanted to borrow from Retirement Fund Incorporated (KWAP) was the single selling point behind the civil servants’ pension fund’s eventual decision to approve the 2012 loan, the High Court heard today.
During Datuk Seri Najib Razak’s trial over SRC International’s funds, prosecution witness Amirul Imran Ahmat agreed when asked if the government guarantee was the “only selling point” for the 2012 loan.
Amirul affirmed this when asked by Najib’s lawyer Harvinderjit Singh, also confirming that the government guarantee was already mentioned when SRC International applied for this loan in 2012.
Amirul Imran was the KWAP official that drafted the paper for the proposed RM2 billion loan as a proposed investment for KWAP’s investment panel to consider.
Citing the investment paper’s contents Harvinderjit had earlier asked: “You drew a lot of emphasis that there was a government guarantee to mitigate payment?”
“Yes,” Amirul Imran replied.
Amirul Imran is the 29th prosecution witness in Najib’s ongoing trial involving seven charges of abuse of position, criminal breach of trust and money-laundering involving RM42 million of SRC International’s funds.
Amirul Imran had previously testified of how SRC International had as a 1Malaysia Development Berhad (1MDB) subsidiary obtained a RM2 billion loan from KWAP in 2011, and that SRC International which then came under the Finance Ministry’s Minister of Finance (MoF) Incorporated ownership had in 2012 obtained a second RM2 billion loan from KWAP.
During his testimony, Amirul Imran appeared to hint at his belief of KWAP’s seemingly reluctance to give out the second RM2 billion loan in 2012 to SRC International.
Amirul Imran confirmed that Zahid Taib — whom he described as a “multi-purpose guy” to SRC International director Nik Faisal Ariff — had in March 2012 emailed to propose a reduced interest rate for the second RM2 billion loan from KWAP.
Former KWAP assistant vice president Amirul Imran Ahmat is pictured at the Kuala Lumpur High Court May 7, 2019. — Picture by Firdaus Latif
Citing SRC International’s new status as a company fully owned by MoF Inc and the latter’s advice, Zahid proposed that the 10-year RM2 billion loan be at a rate of Malaysian Government Securities+85 basis points for the first three years and MGS+65 basis points for the remaining years, which was lower than the first RM2 billion loan’s repayment rates.
Amirul Imran disagreed that Zahid’s proposed interest rate was “relatively lower” than the market rate, saying: “No, for a government-guaranteed loan, it is above market rate.”
Amirul Imran had however went on to prepare a proposed investment paper for the government-backed RM2 billion loan for the KWAP investment panel’s consideration, but with a higher interest rate than asked for by SRC International.
Harvinderjit: Why did you propose a higher interest rate?
Amirul Imran: We hope to price them out.
Harvinderjit: You hope if the rate is higher, they would say no?
Amirul Imran: Yes.
Harvinderjit: It’s not there in the recommendations.
Amirul Imran: Some things cannot be said.
Harvinderjit then noted that SRC International had in a resolution by its company directors said it was agreeable to “comparable or better interest rates” for the second RM2 billion loan, which Amirul Imran confirmed.
Harvinderjit had pointed out that the second RM2 billion loan’s proposed interest rates was the same as the first RM2 billion loan.
Amirul Imran later testified that SRC International’s Nik Faisal and 1MDB official Terrence Geh had provided “nothing of merit” when sharing presentations to him on SRC International’s proposed investments to justify the RM2 billion loan, adding that the duo had in a meeting with him avoided talking directly about any specific investments.
Amirul Imran, who was the assistant vice-president of KWAP’s Fixed Income Department, had also drafted three papers for the proposed first loan to SRC International before it was finally approved.
For the first loan, SRC International had initially applied in June 2011 for a RM3.95 billion loan from KWAP with 1MDB to be the loan’s guarantor.
But Amirul Imran had drafted the first paper with a proposal to limit KWAP’s loan to SRC International to only RM1 billion.
When asked by Harvinderjit if the RM1 billion loan cap was proposed since 1MDB would be the guarantor, Amirul Imran replied: “No, more like we have no choice, so RM1 billion at least.”
When asked to confirm that the KWAP investment panel did not approve the RM1 billion loan, Amirul Imran replied: “It was deferred. They would have just rejected if they had a choice.”
Amirul Imran confirmed however that he could not speak for KWAP investment panel as he was not part of the panel.
Harvinderjit also asked: “When you are saying they would have rejected if they have the choice, it’s your personal opinion?”, with Amirul then saying: “Yup.”
Amirul Imran had yesterday testified that he was put under a lot of pressure to speed up the loan process for SRC International.
The trial before High Court judge Mohd Nazlan Mohd Ghazali resumes tomorrow, where Amirul Imran is expected to be further cross-examined.
MORE TO COME