Najib not in position to control SRC’s board: Filing

 

Former prime minister Najib Abdul Razak has contended that any wrongful transfers of funds out of SRC International were due to its previous management.

In a court filing made on April 4, he claimed it was due to the Minister of Finance Incorporated-owned entity’s corporate structure removing him from any position to control its board.

The former finance minister contended this in his statement of defence against SRC’s US$1.18 billion (RM5 billion) civil suit against him.

In the lawsuit, the former 1MDB subsidiary claimed Najib committed a fraudulent breach of duties as SRC’s then adviser emeritus.

SRC’s allegations are linked to the RM4 billion in loans it received from Retirement Fund Incorporated (Kwap) between 2011 and 2012.

Najib has a pending appeal before the Federal Court against his conviction and sentencing in the criminal corruption case involving RM42 million of funds from SRC.

Seven criminal charges

One of the seven criminal charges in the SRC case was about alleged abuse of power linked to the issuance of government guarantees for Kwap to lend a total of RM4 billion to the company.

In the course of the SRC criminal trial, Najib’s defence team contended he has no knowledge of wrongdoing and that fugitive businessperson Low Taek Jho, known as Jho Low, and other members of management were responsible for any wrongful transfer.

In the filing at the Kuala Lumpur High Court against SRC’s civil suit sighted by Malaysiakini, Najib denied he used his influence, or abused his power or authority to cause Kwap to issue the loans.

The former premier claimed all due processes in Kwap were complied with in approving SRC’s application for the loan, as the retirement fund recognised the government’s interest in the company’s proposed strategic investment in coal, alumina, uranium, iron, as well as oil and gas.

He claimed the then cabinet had the sole power to greenlight the government guarantees and that it did so for the national interest.

Najib contended he never exerted any influence to compel the cabinet ministers to compromise their official duties in relation to the guarantees.

‘Ridiculous’ allegations

The Pekan MP dismissed as ridiculous the allegation that SRC directors’ investment decisions reflected his wish as then prime minister.

Referring to SRC’s cause papers in the civil suit, Najib noted that 27 out of the 31 purported wrongdoings discovered by the company’s new management related to a lack of proper due diligence and supervision of its former management team that led to billions in losses.

“The constitution of SRC entrusts the directors exclusively on matters relating to investments to be undertaken.

“If indeed the former trustees in whom confidence was reposed had closed a blind eye and allowed the proverbial wolf into the coop, the betrayal of confidence ought to have been inquired into,” Najib contended.

He alleged that SRC’s board has exclusive powers in determining investment decisions and policies courtesy of Articles 74, 75, and 78 of the company’s Memorandum and Articles of Association (M&A), as well as Section 131B of the Companies Act 1965.

In refuting SRC’s claim of fraud and wrongdoing, Najib alleged that the company’s own suit appeared to show that its eventual inability to repay the instalments that were due in 2015 was the result of the various unlawful acts of the SRC board.

“Based on the circumstances surrounding Najib’s discharge of duties in public office above mentioned, Najib categorically denies committing any wrongdoing for including the tort of misfeasance or abuse of public office or position, whether as prime minister or finance minister.

“Najib further contends and will contend that he did not embezzle, misappropriate and/or convert any money from SRC or defraud SRC in any way nor did DSN even intend to do so and was not motivated by ulterior motive or improper motives or dishonest or reckless,” he claimed.

Najib contended that Article 117 of SRC’s M&A itself prevents the adviser emeritus from ever issuing advice unilaterally to the government-linked company.

Limited advice

Najib claimed that as per SRC’s corporate governance structure, advice from the adviser emeritus was subject to requests from the board.

He noted that any such advice was limited to material matters and those of strategic interest to Malaysia and could not have affected any matter within the board’s exclusive powers.

“Ultimately, there were no instructions or directions to the board of SRC or SRC’s subsidiaries by Najib as adviser emeritus or otherwise, which compelled or could be reasonably taken as compelling the board of the respective company to carry out the transactions of funds amounting to US$1.18 billion referred to in paragraph 36 of the SOC (statement of claim of SRC’s lawsuit),” he claimed.

He added that this applies to all other alleged transactions referred to in SRC’s cause papers that purportedly caused loss and damage to the company.

Paragraph 36 of SRC’s statement of claim refers to the allegation that between Nov 16, 2011, and April 2, 2014, a transfer of US$1.18 billion was made out of the company for purported investment activities.

Najib also contended that throughout the material time, he acted in good faith and discharged his duty as then prime minister and finance minister to further the national interest.

Relevant decisions

He added that this similarly formed the basis for all relevant decisions and approvals from the Economic Planning Unit, Kwap, Finance Ministry, and the cabinet.

The US$1.18 billion suit is one among 22 civil actions launched by 1MDB and SRC last year, targeting those who purportedly defrauded the two government-owned entities, whether knowingly or unknowingly.

In the current civil action, the sole plaintiff is SRC while Najib is the only defendant.

The lawsuit initially listed as defendants several former SRC directors - Suboh Md Yassin, Mohammed Azhar Osman Khairuddin, Nik Faisal Ariff Kamil, Che Abdullah @ Rashidi Che Omar, Shahrol Azral Ibrahim Halmi, and Ismee Ismail.

However, their names have since been dropped.

SRC and Najib are represented by counsel from law firms Rosli Dahlan Saravana Partnership and Shafee & Co, respectively. - Mkini