In what is an obvious effort to minimise his error in neglecting to do further due diligence on the investments by SRC, Shahrol said he took things that were proposed to him by Nik Faisal at “face value”, including the fact that the latter may be telling former Prime Minister Najib a different story altogether
KUALA LUMPUR – Datuk Shahrol Azral Ibrahim Halmi, a former director of SRC and former 1MDB chief executive officer (CEO), admitted in the High Court on Wednesday that he had neglected to do further due diligence on the (SRC) investments that went through because he took things that were proposed to him by former chief executive officer Nik Faisal Nik Kamil, at “face value”.
While alluding that former Prime Minister Datuk Seri Najib Razak, was like a “grand chessmaster” that whenever the two companies (SRC and 1MDB) were mandated to execute a project, there would be larger pieces that were “moved around” to facilitate these projects. This, he alleged, resulted in the SRC International board agreeing with some decisions on the assumption that Najib had access to more information than they were privy to.
Shahrol had also said in hindsight it is possible that Nik Faisal was telling Najib, who was SRC’s emeritus adviser from 01 May 2012 until 04 March 2019, a very different thing as opposed to what was represented to the board. Nik Faisal was also the mandate holder for five of Najib’s personal bank accounts.
SRC Loan Placements
Testifying in the ongoing US$1.18 billion (RM4 billion) civil action brought by SRC against Najib and Nik Faisal, the former CEO of SRC, Shahrol alluded to the placing of loans that SRC had acquired from Retirement Fund Inc (KWAP) into “time deposits” before they were to be utilised for investments in Indonesia, in the energy and resources sectors.
Shahrol said that the board had raised some concerns over the “time deposits”, which were investments, and decided to hold off on it, but had ultimately approved it as it was pre-authorised by Najib.
“So, it was natural for me to assume in this particular case, that ‘Oh, we (the board) had these concerns but Nik (Faisal) showed us in black and white, (Najib’s) signature saying that he agreed to this move’, so we said in that case ‘we are okay with it because (Najib) may know something more’,” Shahrol explained, adding that this was his thought process but he could not speak for the other directors.
Defence counsel Muhammad Farhan Muhammad Shafee was asking Shahrol to explain how the SRC board could have given its approval a day after it had decided to hold off the decision to make an advance payment while waiting for more information on the ‘time deposits’.
Breached Fudiciary Duty
The defence lawyer suggested that the board had breached its fiduciary duty to the company, to which Shahrol disagreed.
Shahrol: I do not remember if there was a presentation by the bankers (for more information), as requested by the board. I remember signing this (resolution) and I cannot be 100% sure but I believe that it was Nik who brought me the Director’s Resolution Circular (DCR) and showed me the Shareholder’s Resolution to approve the transaction.
Muhammad Farhan: By virtue of you signing this DCR, that would be inconsistent with the board’s own directions the day before, as you said you have not met the bankers or seen any presentations.
Shahrol: Correct.
Muhammad Farhan: So all those concerns raised literally the day before, effectively amounted to nothing?
Shahrol: Yes.
Muhammad Farhan: This is also despite you yourself saying that the (SRC) board has a fiduciary duty to protect the company’s assets. Don’t you think that is a bit reckless?
Shahrol: We were under instructions. In my mind, when Nik (Faisal) presented this proposal to the board and when he encountered the board’s resistance (about the payment), he came back with a DCR with a signed Shareholder’s Resolution, telling us that this is okay with the (then) PM (Najib), so therefore, [to] please comply. So my frame of mind was that if this was what Najib wanted done, he should know something more than I do.
Assume
Shahrol also added that it was normal to assume that a political head of the government would have more information on certain things beyond a company’s board.
Reportedly, the money that went to these “time deposits” were siphoned off by fugitive financier Low Taek Jho (more commonly known as Jho Low) to shell companies associated to him and his associates; RM120 million of the RM4 billion KWAP loans were also funnelled into Najib’s personal accounts, of which Nik Faisal was the mandate holder and has full authority to make deposits and withdrawals without the knowledge of the account holder.
The trial on Wednesday was held before High Court judge Datuk Ahmad Fairuz Zainol Abidin. – NMH
Datin Hasnah is the co-founder and CEO of New Malaysia Herald based in Kuala Lumpur, Malaysia.
With an extensive background in mass communication and journalism, she works on building up New Malaysia Herald and it’s partner sites. A tireless and passionate evangalist, she champions autism studies and support groups.
Datin Hasnah is also the Editor in Chief of New Malaysia Herald.
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