US$60mil flew out of SRC for joint venture that did not generate revenue
KUALA LUMPUR: Some US$60mil flew out of SRC International for the purpose of a joint venture (JV) between its subsidiary SRC BVI and the government of Abu Dhabi relating to a coal mine that ended up not producing coal or generating revenue from mining operations, the High Court heard.

Offshore asset recovery specialist Angela Barkhouse testified that the US$60mil originated from the Retirement Fund Inc (KWAP) loans to SRC, meant to be paid to the JV between SRC BVI and Aabar UAE.

An expert in financial investigation, Barkhouse was the second witness in the hearing of a lawsuit filed by SRC International against Datuk Seri Najib Razak on Wednesday (March 13) before Justice Ahmad Fairuz Zainol Abidin over allegations of breach of statutory duties.

Barkhouse was currently a managing director at Quantuma International, an international advisory firm with specialist expertise in forensic accounting and investigations.

According to the JV agreement, each shareholder (SRC BVI and Aabar UAE held 50% equally of the company shares) was to contribute a sum of US$500mil with an initial contribution of US$60mil.

Barkhouse said that on Nov 21, 2011, SRC International paid US$60mil from its AmBank account to the JV company Aabar-SRC's account, and Aabar UAE made a similar transaction of US$60mil to the same receiving account on Nov 30, 2011.

Aabar-SRC used the majority of funds it received to acquire 14 million shares in Mongolia's Gobi Coal & Energy Ltd (GCE) for US$91mil on Dec 8, 2011.

GCE was a BVI-incorporated company that holds the rights to two large open-cut coal mines in Mongolia.

"Aabar-SRC acquired its shares in GCE in advance of a planned Initial Public Offering (IPO) in 2012. The funds from the pre-IPO were to be used to complete initial construction work on the mine and put in place infrastructure to further increase the value of the coal at IPO," she said in her testimony via Zoom.

Barkhouse said that there was no evidence that the IPO took place.

"Information from GCE indicates that the mines have never produced coal on a commercial basis or generated any revenue from mining operations.

"An email from the current director of GCE, Joseph Borkowski, to Quantuma in 2021 indicates that the mines are stranded without logistics to export coal.

"I note that in the pre-IPO document for GCE, the lack of infrastructure was noted, and GCE stated they planned to build a temporary road to the Chinese border for US$35mil.

"It is not clear why, in the ten years since the investment was made, this road has apparently not been completed," Barkhouse said.

Under new management, SRC filed the legal action in May 2021, alleging that Najib had committed a breach of trust and abuse of power, misappropriated the company's funds, and personally benefited from them.

It named Najib, along with its former directors Datuk Suboh Md Yassin, Datuk Mohammed Azhar Osman Khairuddin, Nik Faisal Ariff Kamil, Datuk Che Abdullah @ Rashidi Che Omar, Datuk Shahrol Azral Ibrahim Halmi and Tan Sri Ismee Ismail in May 2021.

However, later, it removed six names from the suit and retained Najib and Nik Faisal as the first and second defendants.

Additionally, Najib brought the former SRC International directors as third-party respondents to the suit.

Najib was SRC’s Emeritus Advisor from May 1, 2012, until March 4, 2019.

The company was seeking damages, interests, costs, and a court declaration that Najib was responsible for the company’s losses due to his breach of duties and trust. He demanded that Najib pay back the US$ 1.18 billion in losses that it had suffered.

It was also seeking US$120mil and US$2mil from Najib and Nik Faisal, respectively, on account of fraudulent breach of fiduciary duties and breach of trust.

Najib had been serving a jail sentence at the Kajang Prison since Aug 23, 2022, after being convicted of misappropriating RM42mil in SRC International funds.

After he filed a petition for a royal pardon on Sept 2, 2022, his jail term was reduced from 12 years to six years, and the fine was reduced to RM50mil from RM210mil.

The hearing continues.
Courts Crime, SRC BVI,Najib Razak,Court,Angela Barkhouse,Retirement Fund Inc,KWAP,
KUALA LUMPUR: Some US$60mil flew out of SRC International for the purpose of a joint venture (JV) between its subsidiary SRC BVI and the government of Abu Dhabi relating to a coal mine that ended up not producing coal or generating revenue from mining operations, the High Court heard.