KUALA LUMPUR (Aug 15): Former SRC International Sdn Bhd chairman Tan Sri Ismee Ismail agreed with lawyer Tan Sri Muhammad Shafee Abdullah that the RM4 billion Retirement Fund Inc (KWAP) loans, which SRC had procured, had been disbursed before amendments to the company’s constitution which gave former prime minister Datuk Seri Najib Razak advisory powers to the board were made.
Ismee was recalled by Shafee to take the stand in the ongoing US$1.18 billion (RM4 billion) civil action suit brought by SRC against Najib, where Shafee on Thursday asked him specifically about Article 117 of SRC’s Memorandum and Articles of Association, which stipulated that the SRC board of directors would have to refer to Najib as the adviser emeritus for major decisions on investments or expenditures.
Shafee then told Ismee that although SRC was formed in 2010, Article 117 was only changed in May 2012 — after the RM4 billion KWAP loans were disbursed. Ismee agreed.
Shafee: SRC was implemented in 2010. You know Articles 117 and 118 were approved in April 2012, and launched in May 2012. So, in the first two years, when KWAP loans were disbursed, Articles 117 and 118 were not there?
Ismee: Correct.
Ismee said that there was nothing wrong with both Articles 117 and 118, where Article 118 stated that Najib as the then prime minister could appoint any adviser to the board.
Shafee also asked him if Najib had used Article 118 to appoint another adviser, to which Ismee said 'no'.
Previously in the same trial, Datuk Shahrol Azral Ibrahim Halmi, a former director of SRC and ex-chief executive officer of 1Malaysia Development Bhd (1MDB), said that Najib had “absolute power” over decision-making in the state-owned company, as all matters brought to the board had in fact been approved and endorsed by the then prime minister.
SRC is a former subsidiary of 1MDB.
Shafee: Najib did not hire puppets to be on the board
As Najib had the sole power to appoint directors, the Court of Appeal judges in 2021, while upholding Najib’s 12-year jail sentence and RM210 million fine from the High Court, labelled the directors as “Najib’s puppets on a string”, as they followed all his instructions without question.
However, in the trial on Thursday, Shafee asked Ismee about the board’s qualifications — that if Najib wanted puppets, he would have chosen a less qualified board of directors .
Shafee: So now, if Najib wanted the board to be puppets and he the puppet-master, he would not have chosen such highly qualified members of the board, who have their own brain and high qualifications. Is that a fair statement?
Ismee: It is fair.
Shafee: He would have chosen somebody to be a 'Pak Turut' (yes-man) — he's not going to choose highly qualified people.
Ismee: Correct.
Shafee also asked him if Najib ever made any demands to him personally.
Shafee: Najib didn’t call you to direct you or [tell you] to take his cue or directions for the board?
Ismee: No.
Shafee: Do you know if he called other directors to instruct them?
Ismee: No.
Ismee was then released from the stand. The trial before High Court judge Datuk Ahmad Fairuz Zainol Abidin will continue on Sept 17, with Najib poised to take the stand.
This civil case revolves around KWAP loans of RM4 billion, which were given to SRC in two tranches — in the second half of 2011, and the first half of 2012. This is separate from the SRC criminal case, for which Najib is serving his aforementioned jail sentence.
SRC filed the RM4 billion suit against Najib and the company’s former CEO Nik Faisal Ariff Kamil, who is currently at large, in May 2021.
Initially, the suit also named Ismee, Shahrol, and former SRC directors Datuk Mohammed Azhar Osman Khairuddin, Datuk Suboh Md Yassin, and Datuk Che Abdullah @ Rashidi Che Omar as defendants.
They were dropped later, only for Najib to bring them back as third parties. A defendant can initiate this against a third party who is not part of the main suit, in order to claim any contribution, indemnity, or remedy, as claimed by the plaintiff.
SRC claims that out of the KWAP loans of RM4 billion, a sum of RM3.6 billion was immediately transferred out when the funds came into SRC, of which a sum of US$120 million eventually ended up in Najib’s bank account.