SRC appeal: MoF officers had no access to 1MDB former unit SRC although MoF Inc owns it

PUTRAJAYA (April 19): SRC International Sdn Bhd only reported to the Finance Minister according to the command structure of the former subsidiary of 1Malaysia Development Bhd (1MDB) then.  

Officers of the Ministry of Finance (MoF) had no access to certain information of SRC even after the ownership of the company had been transferred to the Minister of Finance Inc (MoF Inc) in 2012, the Court of Appeal heard today. 

In fact, the MoF — although tasked with the responsibilities of supervision over SRC — had no knowledge of the operation in SRC and it was unclear about the company’s business and investment activities up until 2015, which was more than three years after it had become an MoF Inc company. 

Ad hoc prosecutor Datuk V Sithambaram submitted today that the structure was orchestrated to ensure that SRC was made to only report to Datuk Seri Najib Razak, who was then the finance minister and the prime minister, and no one else. 

"No supervision was possible by MoF even though SRC was an MoF Inc company. Despite requests and efforts taken by Bahagian MKD and MoF to acquire information on the status of SRC, none was provided," he said. 

Sithambaram today was addressing the three criminal breach of trust (CBT) charges, out of the seven charges including abuse of power and money laundering, against Najib related to the misappropriation of RM42 million belonging to SRC. 

Najib was found guilty of all the seven charges at the High Court last year and was sentenced to 12 years in jail and fined RM210 million. He is now appealing against the conviction at the Court of Appeal. 

During his rebuttals to the defence's appeal today, Sithambaram referred to the testimony by former Treasury deputy secretary-general Datuk Fauziah Yaacob, who said MoF officers were normally placed on the board of directors (BOD) of all MoF Inc companies in order to advise and determine the direction of the company in compliance with the rules and regulations of the ministry. 

However, she testified that 1MDB and SRC were the only two companies that MoF did not have any board representatives. In fact, Sithambaram pointed out that the Memorandum and Articles of Association of SRC specifically does not allow any government personnel to be its board member. 

To further prove the point that Najib had overarching powers over SRC, Sithambaram highlighted the testimony of former Treasury deputy secretary-general Datuk Mat Noor Nawi, who mentioned that the decision to transfer ownership of SRC was a "top-down decision making process". 

Mat Noor testified that he had no other choice but to execute the instructions of the former prime minister, Najib. 

Sithambaram said this proved that Najib was a party to the decision to make SRC an MoF Inc company and that he seemed to be in a "particular rush to ensure that SRC becomes an MoF Inc company under his purview and control".

"Since the inception of SRC, the appellant (Najib) as the prime minister had sole authority to hire and fire members of the SRC BOD. With the transfer of SRC into MOF Inc, the appellant further enhanced his control of the SRC BOD as the company was now placed legally under his purview and control. This enhancement of his position as the corporate representative of MoF Inc enabled him to directly instruct the SRC BOD to carry out his instructions through the shareholder minutes he issued.

"The learned judge correctly decided the evidence of transferring the ownership of SRC demonstrates the steps taken that resulted in the appellant being entrusted with dominion over the property of SRC. This transfer resulted in a consolidation of the control the appellant had over SRC and made him the sole shareholder, thus allowing him authority to issue shareholder minutes to the SRC BOD," Sithambaram submitted, concurring with the judgement made by High Court judge Justice Mohd Nazlan Mohd Ghazali last year. 

The 14-day appeal hearing will continue tomorrow with the prosecution resuming its rebuttals. 

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