Cabinet authorised Najib to decide T&C for SRC's loans

NAJIB TRIAL | Cabinet authorised, on two occasions, the finance minister to determine the terms and conditions of SRC International's two loans, totalling RM4 billion.

This was revealed by former cabinet deputy chief secretary Mazidah Abdul Majid through her witness statement read out to the Kuala Lumpur High Court today.

Mazidah testified that she oversaw the preparation of the minutes of two cabinet meetings (held on Aug 17, 2011 and Feb 8, 2012) where the finance minister put forth two memorandums for discussion.

The documents were both titled "Government guarantee for RM2 billion loans sought by SRC International Sdn Bhd".

According to the minutes, the purpose of the documents was to seek cabinet's consideration and approval of:

- A government guarantee of RM2 billion for SRC International to secure a loan for investment purposes in the energy sector.

- Tax and stamp duty exemption for SRC International.

- That the finance minister be granted the authority to determine the terms and conditions of the loan.

Mazidah said then prime minister Najib Abdul Razak had chaired both cabinet meetings. He was also the finance minister at the time.

As finance minister, he also oversaw Minister of Finance Incorporated (MOF Inc) and KWAP. MOF Inc was the sole shareholder of SRC International's parent company at time - 1MDB.

No discussions

Mazidah (below) said Najib did not declare his interest in SRC International nor did any cabinet member request that the then chair of the meeting excuse himself.

According to Mazidah's testimony, there were no discussions on both memorandums based on the minutes of the meetings and that the contents were simply adopted.

"Had there been discussions, it would have been recorded in the minutes to show that cabinet had acknowledged the statements, views or explanations.

"Such records do not exist in the minutes," she said in reference to the meeting on Aug 17, 2011. She testified that the same applied for the Feb 8, 2012 meeting.

Mazidah testified that the cabinet's memorandum contained matters which required deliberation.

All memorandums must be accompanied by a summary, which cannot be more than four pages long.

Mazidah's testimony did not mention KWAP. Yet testimonies from other witnesses had established that SRC International borrowed a total of RM4 billion from KWAP after the company secured the two government guarantees.

Purpose of loan changed

Meanwhile, Mazidah also testified that there was another cabinet meeting on May 16, 2012 which saw a finance minister memorandum on SRC International.

This document was titled "Amendment to the purpose of the loan by SRC International Sdn Bhd and 1MDB Real Estate Sdn Bhd". 

Cabinet was asked to consider and approve the following:

- Amend a clause on the decision made by Feb 8, 2012 to "financing investment activities in the natural resources industry and working capital".

- Amend the purpose of the loan by 1MDB Real Estate Sdn Bhd decided on Nov 11, 2011. The new purpose for the loan states that the company will finance the cost of relocating the Sungai Besi airbase.

- That the finance minister be granted the authority to determine the terms and conditions of the loan.

Mazidah testified that as with the cabinet meetings on Aug 17, 2011 and Feb 8, 2012, the contents of the finance minister's memorandum tabled on May 16, 2012 was adopted without any discussions being recorded in the minutes.

Unlike the cabinet meetings on Aug 17, 2011 and Feb 8, 2012, the meeting on May 16, 2012 was not chaired by Najib, who was abroad at the time.

Instead, the person who chaired the meeting was then deputy prime minister Muhyiddin Yassin.

RM100m bailout

During the Nov 2, 2015 cabinet meeting, yet another memorandum by the finance minister on SRC International was tabled.

This was titled "Federal government short-term loan of up to RM100 million to SRC International Sdn Bhd".

The memorandum stated that cabinet should consider approving this loan to prevent a default by SRC International which would make the federal government liable to returning RM4 billion plus interest to KWAP.

The other reasons for the loan was to prevent a negative market reaction to financial instruments guaranteed by the government.

Again, this memorandum was adopted without discussion by cabinet, which was chaired by then-deputy prime minister Ahmad Zahid Hamidi.  - Mkini