KWAP Investment Panel not 'compelled' to lend money to SRC, former CEO says

KUALA LUMPUR (May 30): Retirement Fund Inc's (KWAP) investment panel, the body that has the final say on whether to approve a loan to a third party using the fund's money or not, was not "compelled" to act in accordance to the government's intent to lend money to SRC International Sdn Bhd, the High Court was told yesterday.

As former prime minister Datuk Seri Najib Razak's SRC trial entered its 20th day, defence counsel Harvinderjit Singh, during his cross-examination of former KWAP chief executive officer Datuk Azian Mohd Noh, suggested that none of the personnel in the civil servants' retirement fund were pressured to approve the first RM2 billion loan to SRC.

Harvinderjit pointed out that if KWAP was pressured, its investment panel would have approved the loan at an earlier stage, when the fund's fixed income department recommended that it only extend a RM1 billion loan, instead of later, when SRC subsequently applied for the first RM2 billion loan with Najib's endorsement.

"May I suggest that they (KWAP) did not feel any compulsion [for] approving the loan, because if they were influenced [to] rush through the loan, they could have approved it at this stage," he said.

"Influence and compelled are two different words. If you use the word compulsion, then yes, KWAP was not compelled," Azian responded.

Azian also confirmed to Harvinderjit that nobody in KWAP interpreted Najib's endorsement for the proposal to raise debt from KWAP as an order.

"You got the [loan application] letter [with Najib's consent] and you left it to the discretion of the fixed income department to recommend," Harvinderjit said, to which Azian agreed.

"I personally did not take that letter as an instruction," she said.

Azian also agreed with Harvinderjit that the investment panel is not bound by any recommendation from the fixed income department, and that the panel has to exercise its fiduciary duty to prioritise KWAP's interest in whatever decision it makes.

In previous hearings earlier this month, KWAP's fixed income department assistant vice president Amirul Imran Ahmat told the High Court that the fund was under pressure to expedite the RM2 billion loan approval process for SRC.

Yesterday, Azian said the Retirement Fund Act 2007 provided KWAP Investment Panel the discretionary power on loan approval.

Nonetheless, consistent with Amirul's earlier statement, Azian also recalled that former KWAP chairman Tan Sri Wan Abdul Aziz Wan Abdullah had informed her that Najib wanted the fund to expedite SRC's first RM2 billion loan application process.

Harvinderjit, however, pointed out that Azian was not present when Najib allegedly conveyed such message to Wan Abdul Aziz, to which Azian agreed that she was not able to prove this.

Earlier, Azian was asked if it was a big issue for KWAP to not obtain the official government guarantee before it disbursed the first RM2 billion loan to SRC.

"I cannot comment on that. It will be only be my opinion. We agreed to disburse the loan based on a letter of assurance from an MoF [Ministry of Finance] officer, and the letter stated that Cabinet has approved the government guarantee, but it would be ideal if we could have obtained the government guarantee before the loan was disbursed," she told defence counsel Datuk Yusof Zainal Abiden.

Yusof then asked whether this method of disbursement had happened before, to which Azian said, "Not during my career in KWAP."

Click here for more property stories.