KUALA LUMPUR (March 31): Former prime minister Datuk Seri Najib Razak is liable to pay US$1.18 billion (RM4.77 billion) for losses suffered by government-owned company SRC International Sdn Bhd, the High Court ruled on Tuesday.
In the decision, trial judge Datuk Ahmad Fairuz Zainol Abidin said Najib was liable for breaching his fiduciary duty and committing misfeasance in public office. He must also repay a separate US$120 million that ended up in his private bank account.
The totality of the evidence “tips overwhelmingly in favour of SRC’s version” relying on documentary records, and fund flows as well as Najib’s own admissions, Ahmad Fairuz said.
SRC International, established in 2011 as a subsidiary of 1Malaysia Development Bhd (1MDB) to pursue overseas energy investments, borrowed large sums of money backed by government guarantees.
The borrowings included RM4 billion from the Retirement Fund Inc, the pension fund for civil servants also known as KWAP, and some of the funds were shifted offshore through intermediary entities before ultimately reaching Najib’s personal account.
Ahmad Fairuz highlighted Najib’s “distinct and contradictory” narratives during the trial to deny receipt of the US$120 million. Najib began with “bare denial” and claimed he did not undertake the transactions and that the money entering his account was unknown to him.
“The bare denial was completely contradicted” by Najib’s own counsel, who merely stated that “I am not disputing that the money was put in; it’s not part of my case” after being confronted with evidence that US$120 million had entered Najib’s personal account, the judge noted.
When Najib could not maintain the denial, he pivoted to the defence that the “694” account was for corporate social responsibility (CSR) purposes.
“Najib was then forced to admit that the designation ‘CSR’ does not appear anywhere in the bank statements of the ‘694’ account” and conceded that there was no surplus money in SRC for CSR programmes, Ahmad Fairuz said.
“The evidence shows conclusively that account ‘694’ was Najib’s personal and private banking account,” he ruled.
Najib then claimed he did not personally monitor or manage his accounts, a defence that Ahmad Fairuz described as contradictory: “Najib cannot claim he was unaware of his account activities and that he was aware of specific credits into the account.”
The judge noted the money trail shows that the funds passed through five layers: SRC International, SRC BVI, Enterprise Emerging Markets Fund, Blackstone Asia and Najib’s personal account, with each entity serving as a pass-through to obscure the ultimate destination.
Deliberate concealment
Ahmad Fairuz, who now sits at the Court of Appeal, concluded that Najib showed a clear pattern of deliberate concealment in exercising his public powers.
He hid material information from the Cabinet when procuring government guarantees, failed to disclose his personal receipt of SRC International-linked funds, and neglected to inform relevant authorities of SRC International's defaults despite statutory obligations.
The judge also highlighted that Najib exercised meticulous control over SRC International's strategic decisions until funds were disbursed offshore, followed by a complete abandonment of oversight.
"He prevented investigations that could help identify wrongdoers and recover assets,” Ahmad Fairuz said. “He protected himself at SRC's expense by conceiving the fraud.”
Ahmad Fairuz said the case is a "paradigm example of bad faith in public office" with Najib abusing his position to facilitate misappropriation rather than honestly performing his duties.
On causation, the court found a direct and unbroken link between Najib's actions and SRC International's losses, including RM4 billion in borrowings, rapid offshore diversion of funds, and the eventual misappropriation of approximately US$1.8 billion.
“An honest public officer concerned for SRC's welfare would have sought recovery of the misappropriated funds," the judge said, lamenting that Najib had "exercised absolute authority over the company's affairs while avoiding scrutiny of the misappropriation."