KUALA LUMPUR (Sept 26): Former prime minister Datuk Seri Najib Razak told the High Court here on Thursday that he left the running of SRC International Sdn Bhd to its board of directors as he was overseeing the country's fiscal growth.
Testifying in SRC's civil suit against him, the 71-year-old spoke about his economic achievements when asked about the mismanagement that happened in SRC, which had taken out a second RM2 billion loan from Retirement Fund Inc (KWAP) shortly after having borrowed the same amount previously.
Lawyer Datuk Lim Chee Wee was questioning Najib about the approval for the second loan despite SRC being heavily in debt from the misuse of the first RM2 billion loan it obtained from KWAP.
Najib, who was chairman of SRC's board of advisers at the time, did not give a direct answer when Lim asked him if he and SRC's board of directors undertook any due diligence over the second loan application. Instead, the former prime minister, who was also the finance minister and sole shareholder of SRC by virtue of his finance minister post, went on to list the country's economic achievements during his administration.
“When I was prime minister, fiscal deficit fell from 6.9% to 3% when I left office. In a macro context, the total debt position decreased. The economy grew, the government deficit sat below 3%. The country’s credit rating went from B+ to A,” he said.
“We did better and better over that period of time,” Najib said before High Court judge Datuk Ahmad Fairuz Zainol Abidin.
He then said he had put his trust and confidence in the board of SRC to handle the running and management of the company.
“I had confidence in the board that they would do the right thing. That's why they were there, they were placed there to do the right thing,” he said.
A day earlier, Najib told the court that the board of directors had breached their fiduciary duty towards SRC.
In this SRC suit that was filed in May 2021 by its new management against Najib and former chief executive officer Nik Faisal Ariff Kamil, who is currently at large, SRC accused them of breach of trust and abuse of power that led to the company's losses of US$1.18 billion. It also accused Najib of having misappropriated the company's funds and personally benefiting from them. SRC claimed that out of the total KWAP loan of RM4 billion, a sum of RM3.6 billion was immediately transferred out when the funds came into SRC.
It wants the court to order Najib to compensate the company US$120 million, and for Nik Faisal to pay US$2 million to SRC, and for the company to be entitled to trace the amount it lost in general, exemplary and aggravated damages.
This is different from Najib's criminal SRC case, where he was found guilty of criminal breach of trust, money laundering and abuse of power of SRC funds amounting to RM42 million that was received between Dec 26, 2014 and Feb 10, 2015.
SRC, meanwhile, had obtained a judgement in default against Nik Faisal in November 2021 after he failed to enter an appearance in the matter.
SRC initially also named former company board members Tan Sri Ismee Ismail, Datuk Suboh Md Yassin, Datuk Mohammed Azhar Osman Khairuddin, Datuk Shahrol Azral Ibrahim Halmi, and Datuk Che Abdullah @ Rashidi Che Omar as defendants, but dropped them later.
Najib, however, got approval from the court 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 contribution, indemnity, or any remedy which is claimed by the plaintiff.
The trial continues on Friday.