KUALA LUMPUR (March 5): Former BSI banker Kevin Swampillai told the High Court (Commercial Division) on Tuesday he was under the impression that transactions concerning the BSI account of SRC BVI, a subsidiary of SRC International Sdn Bhd, to questionable fiduciary funds were undertaken with the knowledge and direction of Datuk Seri Najib Razak.
Swampillai, 63, the first witness in the SRC International civil trial, said he based this on the understanding at BSI at all levels that fugitive businessman Low Taek Jho, better known as Jho Low, was the adviser to the then prime minister on matters concerning 1Malaysia Development Bhd (1MDB) entities, including SRC International. The operation of accounts of the 1MDB entities was then under the bank.
Responding to questions about his witness statement by SRC International counsel Kwan Will Sen, Swampillai said SRC BVI opened its account in BSI Singapore sometime in the middle of 2011 after a meeting with Jho Low.
Swampillai testified that Jho Low approached BSI Singapore in the second quarter of 2011, particularly its senior management and Yak Yew Chee, who was a former BSI managing director, to enquire about opening an account for SRC BVI with BSI, and the implementation of certain fiduciary solutions.
“Yak requested me to attend a meeting with Jho Low to conduct a presentation explaining to Jho Low the entire range of fiduciary solutions available through BSI. The range of solutions included trusts, insurance structures, as well as fiduciary funds,” the witness said, adding that those present included his subordinate Yeo Jiawei.
Not long after the meeting, Swampillai said the SRC BVI account was opened at the bank, and SRC BVI executed several transactions transferring the monies to certain fiduciary funds.
The witness further said after the SRC BVI account was opened, SRC International transferred US$864.5 million between Nov 22, 2011 and April 2, 2012.
While Swampillai did not name the source of the funds, it is understood to have come from two Retirement Fund Inc (KWAP) loans of RM2 billion each, disbursed to SRC International in August 2011 and March 2012 respectively.
“The “incoming funds” were predominantly overseen by BSI’s operations and finance departments, working closely in tandem with the relationship manager (a position held by Yeo).
“Insofar as wealth management services (WMS), which I headed, were concerned, I would be informed by Yeo and Yak that instructions were received by Jho Low that SRC BVI would perform certain payments to fiduciary funds, which would then trigger various actions undertaken by WMS to implement these transactions to some fiduciary funds."
Magnitude and frequency of fund transfers needed 'apex approval'
These payments, Swampillai said, would usually be executed almost immediately, or at most a couple of days after the receipt of the incoming funds in SRC BVI's BSI account.
The witness added that the funds were transferred on instructions to Cistenique Investment Fund, Enterprise Emerging Market Fund, and Pacific Rim Global Growth Ltd.
They were collectively referred to as fiduciary funds, he said.
“These funds were domiciled in offshore jurisdictions, which were widely considered to be 'light' in terms of regulatory oversight and control,” he said.
Swampillai said Jho Low acted and provided the instructions to BSI for the fiduciary fund transactions, where the fugitive had represented to Yak and BSI's senior management that he was acting as an adviser to Najib in overseeing the fiduciary fund transactions.
The witness said there were no such documents like letters of authorisation from the SRC International board or SRC BVI to demonstrate Jho Low’s capacity as an SRC International or SRC BVI adviser.
Swampillai said the impression that Jho Low was acting under Najib’s instructions and direction was formed for several reasons, based on communications conveyed to him by Yak and BSI's senior management, where Jho Low made verbal representations and intimitations that he was acting under the authority of Najib.
Moreover, Swampillai said he was aware that SRC International was the parent company of SRC BVI, a company owned by the Ministry of Finance, where Najib was the then finance minister. Furthermore, the impression was based on Jho Low’s responses to BSI’s queries that the transactions were highly confidential government-to government investments, and therefore no further information could be made available.
“Furthermore, the size of the transactions was of such a high magnitude and frequency that they had to have some kind of apex approval, such as that issued by a highly placed government official, such as the prime minister,” the witness added.
'BSI not aware of final destination of funds'
Swampillai said he did not know what transpired with the monies after they were transferred to the fiduciary funds.
“I do not know as BSI Singapore had no visibility after this stage as to the onward movement of the funds,” he said, adding that in retrospect, he agreed with Kwan that they could be sham transactions.
“The fiduciary structures were abused and used to obscure the final destination of the funds. They were also employed to provide the optical illusion of legitimacy to the relevant stakeholders in Malaysia.
“At the material time, BSI and myself had no visibility as to the final destination of the funds. When pressured by BSI, Jho Low would only state that the transactions were government-to-government transactions, and were subject to strict confidentiality requirements. I thus had no knowledge as to the purpose of the transactions at the time these transactions took place,” he said.
SRC International filed the US$1.18 billion suit against Najib and former SRC International chief executive officer and managing director Nik Faisal Ariff Kamil in May 2021.
It had obtained a judgement in default against Nik Faisal, who was named as Najib’s proxy.
In the opening statement for the trial on Tuesday, 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.
During cross-examination by Najib's counsel Harvinderjit Singh, Swampillai said his views that Najib had knowledge of the transfers to the fiduciary funds were based on feedback he gained from Yak or BSI's senior management.
The SRC International trial continues before High Court judge Datuk Ahmad Fairuz Ahmad Zainol on Wednesday.