SRC appeal: Prosecutor insists Najib was ‘shadow director’, ‘puppeteer’ of former 1MDB unit’s board

PUTRAJAYA, April 19 — As ‘shadow director’ of SRC International Sdn Bhd, Datuk Seri Najib Razak was a “puppeteer” in absolute control of the “puppets” on the company’s board who had to execute his instructions, prosecutors told the Court of Appeal today.

Ad hoc prosecutor Datuk V. Sithambaram said this during rebuttal to Najib’s appeal hearing against his conviction and jail sentence for misappropriating RM42 million belonging to the former 1MDB subsidiary.

In his submission on Najib’s three criminal breach of trust (CBT) charges, Sithambaram said Najib’s acts clearly brought him within the ambit of the definition of a director and that the latter was  effectively a “shadow director” in how he conducted himself in relation to SRC’s affairs.

“The definitive element in that the acts, directions and instructions are those that the directors of the company are accustomed to issue or act akin to a shadow director.

“That is exactly how the affairs of SRC were conducted by the appellant.

“The appellant, although not a director formally appointed, was in fact the shadow director of SRC by virtue of the fact that the SRC board were accustomed to act on the instructions or directions of the appellant,” he said.

Sithambaram cited the testimonies of former SRC International chairman Tan Sri Ismee Ismail, who is also the 39th prosecution witness, as proof that Najib’s conduct showed him to have control of the SRC board and dictated the use of the funds of the company through shareholder instructions which Najib personally signed.

“There is a real nexus between the appellant and SRC and this is evident when the appellant himself instructed how the funds of SRC were to be utilised, thus showing that he was indeed the directing mind of SRC.

“It is submitted that the conduct of the appellant in issuing many shareholder instructions fits the description of the puppeteer (the appellant) in absolute control of the puppets (the board) that he himself had placed when he appointed all the members of the SRC board who were unable to dance to any other tune except to that of his,” he said.

As a “shadow director”, Sithambaram said Najib owed a fiduciary duty to the company in the same way as any other directors and act in the best interests of the company.

In order to establish the requirement of a “shadow director”, Sithambaram said evidence adduced in court proved with certainty that Najib had acted as the shadow director of SRC International.

“The appellant issued shareholder instructions which the directors had to follow as they were the instructions of the shareholder who was also the prime minister and the same person who appointed those directors.

“The directors followed all of the instructions of the appellant and acted in accordance with them.

“There is no evidence to show the directors had disregarded or disobeyed the instructions of the appellant,” he said.

Adding further, Sithambaram said the directors were accustomed to act on Najib’s direction as he had appointed them during an instance where the SRC board wanted to drawdown the Retirement Fund Incorporated (KWAP) RM4 billion loan in stages in order to avoid payment of interest for funds that were yet to be utilised.

However, the SRC board was instead instructed to make a full drawdown on the shareholder instructions signed by the Najib, Sithabaram added.

In the RM42 million SRC International case, Najib was sentenced to 10 years’ jail on each of the three counts of CBT and each of the three counts of money laundering, and 12 years’ jail and a RM210 million fine, in default five years’ jail, in the case of abuse of position on July 28 last year.

However, Najib will only serve 12 years in jail as the judge ordered all the jail sentences to run concurrently.

The appeal hearing before Court of Appeal judge Datuk Abdul Karim Abdul Jalil who chaired a three-member panel alongside Datuk Has Zanah Mehat and Datuk Vazeer Alam Mydin Meera continues.