KUALA LUMPUR (March 25): A former SRC International Sdn Bhd director and chief executive officer on Monday denied ex-prime minister Datuk Seri Najib Razak’s allegation that former directors of the company, including himself, had breached their statutory duties as directors for the purported losses of US$1.18 billion the company is seeking.

Datuk Mohammed Azhar Osman Khairuddin — an SRC International director from July 29, 2014, to Feb 22, 2017 — denied being accountable in this. Azhar, 69, who is also formerly a group legal head of Petronas, had been brought in as a third party by Najib, as the former PM is seeking contribution and indemnity for the losses (should Najib be held responsible).

“I cannot be in breach of statutory and fiduciary duties for matters that happened before my time. My specific task when joining SRC International was to execute and get going the Sabah Gas Pipeline Project and the Peninsular Pipeline Project, which were two out of the three Identified O&G Projects in my role as CEO,” Azhar said in reply to questions from his counsel Datuk Loh Siew Cheang.

The RM4 billion Retirement Fund Inc (KWAP) loan was given in the second half of 2011 and first half of 2012, and as reported in this trial, a sum of RM3.6 billion was immediately transferred when the funds came in.

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

Azhar, the third witness in the SRC International civil trial, said he was also not aware of the details of the KWAP loan and was only aware after Najib’s criminal case following the High Court decision and also general news.

The former SRC International director and CEO also denied suggestions made by Najib that Articles 74, 75 and 78 of the SRC International Memorandum of Articles, and Section 131B of the Companies Act 1975, gave the board exclusive powers to manage the company.

“I categorically deny this suggestion. As far as I can say from my time there as a director, whenever it came to finances (fellow director) Nik Faisal Ariff Kamil would always begin by briefing the board on SRC finances.

“Myself and other board members would direct Nik Faisal and management to come up with a plan to retrieve the monies back. That was all I could do given that the KWAP loans were disbursed out of SRC International before my tenure as a director. I was also never a signatory nor ever in a position to give instructions to the accounts deposited overseas, whether in Switzerland or elsewhere,” Azhar added.

Azhar further denied any allegations made by the former PM that any of his act or omission of his actions had caused the losses as a result of the transactions making up the proposed investment fund and the purported fund investment.

“I had urged Nik Faisal to try [to] retrieve monies that SRC International had disbursed abroad following my discovery of [the] severity of the losses suffered by the company,” he said, adding that Nik Faisal had briefed the board in a meeting on April 28, 2015, that the funds deposited in BSI bank had been invested securely.

“Nik Faisal told the board that if we were to call back the funds (from purported fiduciary funds) prior to maturity, SRC will suffer a high penalty. Earlier, we were briefed that SRC was not doing financially well, with its debt already exceeding its assets. In reply, I stressed to Nik Faisal that he had to do everything in his power to bring back the funds with BSI Bank. The board even resolved to table at the next board meeting a redemption plan,” he added.

Azhar said he has no knowledge nor involvement in any decisions of the US$1.18 billion purported investment activities made by SRC International between Nov 16, 2011 and April 2, 2014 as it was prior to his tenure as SRC International director.

“As far as my responsibilities then were concerned, I focused on the day-to-day duties related to executing the Sabah Gas Pipeline project and the Peninsular Pipeline Project (for which he was specifically hired),” the witness said, adding after his retirement from Petronas in 2012, he was hired by SRC International to oversee the implementation of the two projects along with the Coal Stockpile and Blending Project.

During cross-examination by Najib’s co-counsel Harvinderjit Singh, Azhar agreed that he had applied in court to bring back former SRC International directors Tan Sri Ismee Ismail and Datuk Shahrol Azral Ibrahim Halmi as defendants in the suit.

“I felt it was ridiculous that they were allowed to be omitted while I remain (in the suit), when both of them were there during the critical period since its formation,” he said.

SRC International filed the US$1.18 billion suit against Najib and then SRC International chief executive officer and managing director Nik Faisal Ariff Kamil in May 2021. Initially, the suit also named Azhar, Shahrol, Ismee, Datuk Suboh Md Yassin and Datuk Che Abdullah @ Rashidi Che Omar as defendants but were dropped later, only for Najib to bring them back again as third parties.

SRC International had 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.

Read also:
Former SRC director Azhar files third party notice to restore Ismee and Shahrol as defendants in suit
Ex-BSI banker says he's under impression SRC fund transactions undertaken at Najib’s instructions
SRC claims US$120 mil out of RM4b KWAP loan went to Najib 
Shahrol: Najib had ‘absolute power’ in SRC decision-making  
Shahrol: Najib was ‘grand chess-master’ in SRC and 1MDB