KUALA LUMPUR (Jan 20): Jendela Pinggiran Sdn Bhd (JPSB) — a subsidiary of SRC International Sdn Bhd allegedly set up to carry out corporate social responsibility (CSR) activities and received RM43.96 million of SRC funds in 2015 — was used as former Umno president Datuk Seri Najib Razak’s “slush fund”, the High Court heard on Monday.

In his opening statement for the RM19.5 million civil suit brought by SRC and its two subsidiaries against Umno and Umno Selangor, SRC's lawyer Razlan Hadri Zulkifli said the plaintiffs will present evidence to show that Najib wore "two hats" with conflicting interest, and how he was personally and directly involved in giving out SRC's funds as cash handouts to Umno and Umno Selangor.

“On one hand, Najib was the advisor emeritus (shadow director) of SRC, and its subsidiaries Gandingan Mentari Sdn Bhd and JPSB. On the other hand, he was also the president of the defendants (Umno and Umno Selangor),” he said before the presiding judge, Datuk Raja Ahmad Mohzanuddin Shah Raja Mohzan.

Najib was also the sole shareholder of SRC at the time, in his capacity as the finance minister then.

The former prime minister is now serving jail time after having been found guilty in 2022 of criminal breach of trust, money laundering, and abuse of power involving RM42 million of SRC funds. Originally sentenced to 12 years in jail and fined RM210 million, his jail sentence was halved by the Pardons Board in February last year, while the fine was reduced to RM50 million.

Razlan said Umno and Umno Selangor had received a total of RM19.5 million of SRC funds.

This money was part of the RM43.96 million that SRC had first transferred to Gandingan Mentari, and subsequently to JPSB, without the approval of SRC's board of directors.

The money was under Najib's control between April 2015 and July, Razlan said.

“The monies received by the defendants (Umno and Umno Selangor) were by cheques issued by JPSB. The directors and authorised signatories of JPSB had issued blank cheques — a literal "carte blanche" — to Najib, who then handed the cheques over to Umno and Umno Selangor," he said.

Umno had received RM16 million, while Umno Selangor got RM3.5 million.

He said JPSB was basically Najib’s slush fund to distribute SRC's money to various entities or individuals "for reason or purpose he deemed fit”.

“JPSB was at all times a completely inactive company incorporated for no discernible reason, with no business activity. Naturally, it follows that there was neither any economic relationship nor business dealings between JPSB with the Umno and Umno Selangor at all material times. This applies to the other plaintiffs as well, SRC and Gandingan Mentari,” he said.

The plaintiffs will produce evidence that shows Najib was a shadow director of SRC, he added.

Razlan also said that while Umno and its Selangor chapter may not know of the funds' origins at the material time, they do now. So, it would be unconscionable for them to retain the money they received from Najib, he said.

The RM43.96 million that JPSB received from SRC was part of the RM4 billion that Retirement Fund (Incorporated) (KWAP) had loaned to SRC between 2011 and 2012, he said.

Of the RM4 billion, RM3.6 billion was transferred out to SRC’s foreign subsidiary incorporated in the British Virgin islands — namely SRC International (Malaysia) — to undertake foreign investment activities in the energy and resources sector.

The remaining RM400 million was retained by SRC in Malaysia for working capital in the country. This was where the RM43.96 million came from, Razlan said.

The plaintiffs' first witness in this trial is Saiful Nizam Yasin, who is currently the company secretary of SRC, JPSB and Gandingan Mentari.

Umno was represented by Mohamed Shahrul Fazli Kamarulzaman, while Datuk Hasnal Rezua Merican represented Umno Selangor.

Kwan Will Sen is Razlan’s co-counsel.

The trial will continue until Jan 24. The case is part of SRC’s bid to recoup funds from the KWAP loan that it lost.

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