KUALA LUMPUR (March 31): Imprisoned former prime minister Datuk Seri Najib Razak had "abused every level of authority" he controlled when it came to the misappropriation of the RM4 billion of pension funds meant for civil servants.
The High Court said this on Tuesday, in finding Najib liable for the US$1.18 billion in losses suffered by SRC International Sdn Bhd, as well as a separate US$120 million of company funds which ended up in his private bank account.
Trial judge Datuk Ahmad Fairuz Zainol Abidin said that Najib had "systematically abused his power" as the sitting prime minister and minister of finance through several actions. These include securing a RM4 billion loan and facilitating the monies’ 'investment' offshore.
"No single individual should have possessed such unchecked power and [Najib] abused every level of authority he controlled," Ahmad Fairuz said.
Najib also served as SRC's advisor emeritus.
The company was initially a subsidiary of 1Malaysia Development Bhd (1MDB) but later was transferred to the Minister of Finance Inc in 2012.
The company, which was established in pursuit of energy security, sought funding from the Retirement Fund Incorporated (KWAP), from which it then received a RM4 billion loan, which was given in two tranches: in the second half of 2011, and the first half of 2012. All the funds were eventually squandered.
Najib was SRC's shadow director
The court also found that Najib was the company's 'shadow director', elaborating that Najib had directed the board at "every juncture" and that the board "never independently evaluated any strategic directions proposed".
"That is the hallmark of a board acting as an instrument of a scheduled director," Ahmad Fairuz said.
He added that despite Najib's contention that the board exercised independent judgement, there was documentary evidence showing otherwise.
"Critical corporate directions were determined before the board even met," the judge said.
Ahmad Fairuz also said that SRC's Memorandum and Articles of Association gave Najib powers which "no other" in the company possessed. This included articles which gave Najib the power to hire and fire any director.
"The directors were placed in an untenable situation….they faced structural constraints in the form of [Najib's] power," he said.
It has to be noted that this civil action, initiated by SRC in 2021, is separate from Najib's criminal case.
Najib is currently serving his prison sentence after the apex court upheld his guilty conviction for criminal breach of trust, money laundering, and abuse of power of SRC funds amounting to RM42 million which was received between Dec 26, 2014, and Feb 10, 2015.
On Tuesday, the court also dismissed Najib's third-party claim against the company's former directors.
Among others, the judge found Najib's pleadings against these directors to lack the specific actions which led to the company's losses.
"The courts cannot fill in the gaps of the pleadings," he said.
Najib had brought in former company directors 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 third parties in order to share liability in the damages.
Najib has indicated that he will be appealing the decision.
The court on Tuesday granted him an interim stay on repaying the total US$1.3 billion to SRC, despite objections from SRC's counsels.
He has 14 days to file for an official stay, after which the court will set a date to hear the arguments on whether the payment should be put on hold till the full disposal of Najib's appeal.