The following that has been reported in The Star adds to and summarizes much which KWAP's senior officers have told the court about a RM 4 Billion loan to SRC International Sdn Bhd:
Datuk Seri Najib Razak's alleged instructions to the Retirement Fund Incorporated (KWAP) to approve loans to SRC International Sdn Bhd in 2011 were not recorded in the fund's investment panel meeting minutes, the High Court heard.
Azlida Mazni Arshad, who is KWAP's Legal and Secretarial Department vice-president, admitted this on Tuesday (May 14) when questioned by defence counsel, Harvinderjit Singh during the former prime minister's corruption trial involving RM42mil in SRC International funds.
She had last week said in court that Najib urged the retirement fund to rush the approval for a RM2bil loan to SRC International Sdn Bhd in 2011.
On Tuesday, the 17th day of the trial, Azlida also admitted that KWAP's fixed income department (FID) could have rejected SRC International's loan application.
She agreed with Harvinderjit's suggestions that they could reject the applications of those applying for loans. She also agreed that the department would analyse the ability of the loan applicant to generate income and pay back their loan.
KWAP approved the RM2bil loan to SRC International in 2011 before approving another loan of the same amount in 2012.
The court had heard in previous testimony that SRC International wanted a loan to get into the business of natural resources such as oil and gas, iron and steel and coal and uranium.
All of the above throws into doubt what KWAP and the ministers in charge have made public about KWAP's accounting of that loan; in essence the public have been told that the loan is government guaranteed and can therefore be booked without qualification.
However, the evidence provided by KWAP officers to the court suggest that there are a number of issues that raised concerns within KWAP about the borrower, and the guarantee that supports that loan.Additionally, the loan is in breach of KWAP's own investment policies.
All of the above suggest that the loan asset's value needs to be discounted, but that does not appear to have been done).In fact, as the story below shows, it is doubtful if the interest payments are actually being made.
Finally, there remains significant doubt as to whether the loan principal will ever be recovered.As reported previously on this blog:
Is KWAP's RM 4 Billion seized by Singapore hostage to Malaysia-Singapore Water Agreement negotiations?
KWAP needs to book the loss and for so long as it does not, its members cannot be confident of the value of their retirement savings.
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