KUALA LUMPUR (Oct 21): Imprisoned former prime minister Datuk Seri Najib Razak said that he would never act against the interest of the country or companies under his purview, as he is beholden to his oath of office.

"As (then-)prime minister (PM), I won't do anything against the interest of the company and country, because I took an oath under the Constitution to protect [...]," the 71-year-old said while testifying in his defence in SRC International Sdn Bhd’s civil suit against him.

While on the stand, Najib also testified that the SRC board had technically followed his strategic direction for the company, but "how" they went about fulfilling that direction was against the company's interest. 

"It is reasonable for them to follow the strategic direction [for the company]. But how they go about it must be in accordance [with the law] and in the best interest of the company.

"[Even] when they fulfil certain national objectives, they still have to conform to the laws and company's Memorandum and Articles of Association (M&A)," Najib said.

He added that any of these directors were free to resign if they disagreed with the company's direction or how it was run. He cited the case of former 1Malaysia Development Bhd (1MDB) chairman Tan Sri Mohd Bakke Salleh, who resigned from the strategic development firm over the management's infractions.

SRC, once a unit of 1MDB, came under the Ministry of Finance Incorporated (MOF Inc) in 2012.

The company was established to seek alternative power sources for the country. However, it squandered billions of Retirement Fund Inc (KWAP) funds which were supposed to be channelled towards fulfilling its objective.

SRC's suit against Najib concerns a RM4 billion loan from KWAP, which was given to SRC in two tranches in the second half of 2011 and the first half of 2012. The company claims that US$120 million had eventually ended up in Najib’s bank account.

This is different from Najib's SRC criminal case where he is already serving his prison sentence after the apex court dismissed his appeal and review bid. In February, the Pardon's Board reduced his initial 12-year jail sentence and fine of RM210 million to six years and a RM50 million fine.

Initially, the company had also named former board members Datuk Shahrol Azral Ibrahim Halmi, Tan Sri Ismee Ismail, Datuk Suboh Md Yassin, Datuk Mohammed Azhar Osman Khairuddin, and Datuk Che Abdullah @ Rashidi Che Omar as defendants in the suit. However, they were dropped later, only for Najib to bring them back again as third parties.

A defendant can initiate this against a third party who is not part of the main suit, in order to claim contribution, indemnity, or any remedy which is claimed by the plaintiff.

Despite roping in former SRC directors as third parties, on Monday Najib could not list the directors’ failure which resulted in the company's losses.

In his defence, Najib had pleaded that the directors had a fiduciary duty as board members and had failed to perform their duties according to the law.  

However, when confronted by Suboh's counsel Datuk Dr Gurdial Singh Nijar during cross-examination on the specifics of the board's failure, the ex-PM merely said he would come back to that.

Gurdial: You did not specifically state what the directors did or did not do which caused SRC to suffer losses. What breach of duty [are you] relying on specifically?

Najib: They are bound by the law, to do what is necessary as directors. Specifically, I will have to go through [the documents].

Gurdial: [You have said] that they have a fiduciary duty and that they didn't perform their duties.

Najib: I'll come back to that.

During Monday's proceedings, Najib insisted that the defendants had a duty by law, and it was not merely to deflect blame or a rhetorical stand.

During an animated exchange on Monday, Gurdial said Najib's statement that the board had a fiduciary duty was akin to a "mantra", repeated et nauseum. Najib took issue with this description, countering that it was not a "mantra", but a substantial argument, in line with the Companies Act.

Najib also reiterated that he was not the person who conceived the idea of SRC.

Najib: It was never my intention in the first place. We have documents to show that I was not the person who conceived the idea of SRC.

Gurdial: Okay, okay, that's fine, correct?

Najib: I have to correct you. If you say the SRC is my baby, I am definitely not the father.

Gurdial: Okay, fine. That means we have totally mistaken, us categorising you as a visionary in this?

Najib: Okay, yes, but as the father of SRC? Definitely not. Because we have documents to show that it was never my idea. Please don't say I'm the father of SRC.

Gurdial: Okay, I won't say.

Najib had previously testified that the idea for SRC came from 1MDB, and he had discussed the matter with Shahrol.

The 71-year-old reiterated that there were hundreds of companies under MOF Inc's umbrella and that he couldn't micromanage the boards of these companies.

He maintained that this was his management style which did not cause any issues with other companies under MOF Inc.

During cross-examination on Monday, Gurdial also pointed out that there was substantial overlap with Najib's defence in the SRC criminal case and his statement of defence in this civil action, particularly when it came to the board's responsibility.  

The senior lawyer then asked if Najib was trying to relitigate matters which had already been decided in the SRC case.

Gurdial: The third party claim is based on these same issues. The issues have been adjudicated elsewhere. What you really want is for this court to vindicate you.

Najib: [This] is my perspective on what happened.

Gurdial: You want the court to come to a different conclusion which favours you?

Najib: That's right.

In this suit, SRC is seeking a declaration from the court that Najib is liable to account for the company's losses of US$1.18 billion due to breach of duties and trust. It is also asking for an order for Najib to compensate US$120 million and for former SRC chief executive officer Nik Faisal Ariff Kamil to pay US$2 million to SRC, and for the company to be entitled to trace the amount in general, exemplary, and aggravated damages.

The company has obtained a judgement in default against Nik Faisal in November 2021, after he failed to enter an appearance in the matter.

The trial before High Court judge Datuk Ahmad Fairuz Zainol Abidin continues on Oct 24 with Najib's re-examination. 

https://www.theedgemarkets.com/node/730925