Former 1MDB unit owes Malaysian pension fund $1.36 billion

KUALA LUMPUR • SRC International, a former subsidiary of scandal-tainted state fund 1Malaysia Development Berhad, owes Malaysian pension fund Kumpulan Wang Persaraan (KWAP) RM4.15 billion (S$1.36 billion) as of last month, which the government has to pay up, the Kuala Lumpur High Court heard yesterday at the corruption trial of former prime minister Najib Razak.

Najib is facing seven charges tied to criminal breach of trust, money laundering and abuse of power involving SRC International and how SRC funds were transferred into his private bank accounts.

In a Malay Mail online news report, Ms Afidah Azwa Abdul Aziz, deputy secretary at the Finance Ministry's Strategic Investment Division, told the court yesterday that the amount owed by SRC consisted of the remaining principal amount it borrowed and outstanding interest payments.

"Until now, the federal government continues to help pay the loan debts of SRC International to KWAP, and payment will continue until the principal amount and existing interest are paid in full," she said.

Ms Afidah Azwa said the loan repayment period will last until 2022, which is 10 years from the date the KWAP loan was given out, based on an agreement between SRC and KWAP.

She said that in 2015, the federal government had to approve a RM642 million loan to KWAP when SRC could not pay its loan obligation to the pension fund, Free Malaysia Today online news quoted her as telling the court.

Ms Afidah Azwa said if this emergency money was not issued, the government which stood as guarantor for the RM4 billion loan would have had to settle the principal amount within 30 days due to a loan default under the agreement.

 
 
 

Last week, the court heard about how RM2 billion of the KWAP loan was channelled to a secret bank account and how a fugitive former SRC chief executive is wanted by the authorities.

This followed eye-popping witness testimony last month that KWAP released RM4 billion in cash - its biggest-ever loan - to SRC after getting two letters of guarantee for the funds.

One letter was signed by Najib, who was also finance minister at the time. The other was signed by then Second Finance Minister Ahmad Husni Hanadzlah.

 
A version of this article appeared in the print edition of The Straits Times on June 20, 2019, with the headline 'Former 1MDB unit owes Malaysian pension fund $1.36 billion'. Print Edition | Subscribe