Prosecutors describe flow of state funds into Najib's accounts

Najib Razak.
Najib Razak.

Pension funds were moved via other firms, say witnesses in trial of former Malaysian PM

Malaysian prosecutors this week sought to show how funds flowed from the country's largest civil service pension fund into Najib Razak's personal bank accounts, as the first of five criminal trials against the former prime minister entered its seventh week.

The High Court in Kuala Lumpur heard witness testimony on how loans totalling RM4 billion (S$1.3 billion) given by state pension fund Kumpulan Wang Persaraan (KWAP) to SRC International were approved, and how RM42 million from those funds was later channelled by SRC to Najib's bank accounts via other companies.

Najib faces seven charges for abuse of power, criminal breach of trust and money laundering relating to the RM42 million from SRC, a former unit of state fund 1Malaysia Development Berhad (1MDB) that was set up to invest in energy and natural resources.

The MP for Pekan faces a total of 42 counts of corruption and money laundering relating to 1MDB. The charges will be heard across five trials.

1MDB, a state investment fund set up under Najib's administration in 2009, is at the centre of an international multibillion-dollar scandal, with over US$4.5 billion (S$6.2 billion) alleged to have been embezzled from it.

Witness testimony at the SRC trial recounted how the RM4 billion in loans from KWAP was approved after the government provided two letters of guarantee for them. One of the letters was signed by Najib, who was both Prime Minister and Finance Minister at the time. The other was signed by then Second Finance Minister Ahmad Husni Hanadzlah.

"Throughout my experience in my service in KWAP, both of the loans to SRC amounting to RM4 billion were among the largest I have seen approved by KWAP," said Mr Amirul Imran Ahmat, a former assistant vice-president who worked at the pension fund from 2011 to 2014.

The loans - RM2 billion in August 2011 and another RM2 billion in March 2012 - were released after the guarantees were issued.

Witness testimony at the SRC trial recounted how the RM4 billion (S$1.3 billion) in loans from KWAP was approved after the government provided two letters of guarantee for them. One of the letters was signed by Najib (above), who was both Prime Minister and Finance Minister at the time. The other was signed by then Second Finance Minister Ahmad Husni Hanadzlah.

 
 
 

The court also heard testimony that RM42 million from SRC was subsequently transferred to Najib's two personal bank accounts between December 2014 and February 2015. The sum was first sent to SRC subsidiary Gandingan Mentari, and from there to Ihsan Perdana - SRC's corporate social responsibility (CSR) partner - before it ended up in Najib's accounts.

Those who transferred the funds said at the trial they were unaware that the accounts belonged to the former premier.

Ihsan Perdana's managing director Shamsul Anwar Sulaiman said that the transfers were done without knowledge of the account owner's identity.

"If I had known the accounts belonged to Najib, I would not have made the payments," he said on Wednesday. Datuk Shamsul is division chief of the youth wing at former ruling party Umno, which Najib used to head.

Witnesses said the fund transfers were designated for CSR programmes and were made under the orders of Yayasan Rakyat 1Malaysia's (YR1M) chief executive Ung Su Ling. The foundation had provided funding to Ihsan Perdana in the past to conduct CSR programmes. Najib had also served as a director at YR1M.

Cheques were then issued from Najib's accounts for personal and political expenses, including payments to political parties, an events management company and for home renovations.

The trial will resume on May 28 and is expected to continue until August.

 
A version of this article appeared in the print edition of The Straits Times on May 18, 2019, with the headline 'Prosecutors describe flow of state funds into Najib's accounts'. Print Edition | Subscribe