Ismee: Najib in control of SRC after memorandum and articles of association changed

KUALA LUMPUR (June 11): Former SRC International Sdn Bhd chairman Tan Sri Ismee Ismail (pictured) told the High Court here today that former premier Datuk Seri Najib Razak, who was appointed as advisor emeritus of the company, has control of the subsidiary of 1Malaysia Development Bhd (1MDB).

Ismee, who is the 39th prosecution witness, said during examination-in-chief by public prosecutor Datuk Ishak Mohd Yusoff that the key personnel in SRC include the chief executive officer, chief investment officer, chief financial officer whom the board may refer to from time to time.

Ismee noted that SRC memorandum of articles of association was amended following a letter by Najib addressed to SRC's board of directors, and this was stipulated in its board meeting minutes dated April 23, 2012.

The amendment stipulates that "the prime minister shall be appointed and hold office as advisor emeritus to the company. The advisor emeritus shall advise the board on material matters and matters of strategic interest to Malaysia and the board shall give due consideration to and implement any advice of the advisor emeritus in the best interest of the company."

When asked by the prosecution about the implication of the amendment, Ismee said: "The implication to SRC is that the advisor emeritus' views would have to be taken into account in material and strategic issues on the company."

"At the time, the advisor emeritus is Najib," he added.

Ishak: Does the amendment in the memorandum and articles show that the advisor emeritus has control of the company?

Ismee: Yes, he has control.

The witness added that any decision made was brought to SRC's board of directors through the company's managing director (MD).

The MD then was Nik Faisal Ariff Kamil.

To a question by deputy public prosecutor (DPP) Ishak, Ismee explained that SRC's source of fund was the RM4 billion loan from the Pensioners Trust Fund (KWAP) and a RM20 million launching grant by the government.

The witness added that the funds were for investment and working capital.

Yesterday, the witness testified that Nik Faisal would liaise with Najib on decisions to be made.

This included a meeting between the both of them on Sept 7, 2011 — several days after SRC received the first RM2 billion loan from KWAP — where the former premier had ordered SRC to transfer RM1.8 billion, out of the loan, overseas.

A total of RM1.5 billion was transferred to BSI Bank in Switzerland and RM300 million to Bank Julius Baer & Co in Hong Kong, while RM200 million was kept locally for operational purposes.

Cannot verify minutes over directive to transfer RM1.8 billion offshore

During cross-examination by defence counsel Harvinderjit Singh, Ismee was asked at length about the minutes he purportedly obtained from Nik Faisal over his purported meeting with Najib on Sept 7, 2011 about the money transferred abroad.

The witness said he found the minutes of Najib and Nik Faisal's meeting in his briefcase at home only this year, which he then handed over to the Malaysian Anti-Corruption Commission.

Ismee explained that he must have asked Nik Faisal to give him the minutes of the latter's meeting with Najib during the SRC board meeting on Sept 13, 2011, during which the board were briefed by Nik Faisal about the then premier's directive to put the funds overseas to get better returns.

The witness agreed with Harvinderjit that he could not confirm the authenticity of the Sept 7, 2011 meeting minutes, which the court identified as ID499 but did not classify as evidence.

Harvinderjit: You cannot actually confirm if this is the actual document (alleged minutes of Sept 7, 2011 meeting between Nik Faisal and Najib) raised by Nik Faisal at the meeting (with SRC's board of directors) as you never checked it after the meeting (between Nik Faisal and Najib)?

Ismee: Yes.

Harvinderjit then suggests that it was unusual to keep minutes of a meeting involving only two people, which Ismee refutes.

A brief tussle between Harvinderjit and Ismee ensued when the former kept cutting the latter off while he tried to answer questions from the defence lawyer, prompting DPP Datuk V Sithambaram to interject.

This led to High Court judge Justice Mohd Nazlan Mohd Ghazali ruling, "Let him [Ismee] answer."

Ismee then responded: "It is not unusual [to keep meeting minutes], but it is unusual because the minutes involve the Prime Minister."

The former SRC chairman added that Najib did not attend any of the SRC meetings while he helmed the company.

Ismee resigned on Aug 15, 2014, citing corporate governance issues pertaining to the management of the company by Nik Faisal — especially regarding the company accounts and its finances.

He testified in court yesterday that he resigned from SRC after reading from The Edge that the company had yet to submit its 2013 audited accounts, despite the company earlier claiming that they had been submitted.

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