Crime & Courts

SRC's money wasn't used as intended, expert tells High Court

KUALA LUMPUR: A British expert in financial investigations told the High Court today that none of the US$864.5 million from SRC International Sdn Bhd transferred to SRC BVI's BSI Bank account were invested for its intended purposes.

Angela Barkhouse, an offshore asset recovery specialist, said none of the payments made to Cistenique Investment Fund, Enterprise Emerging Market Funds or Pacific Rim Global Growth Ltd were made in furtherance of investments in the energy and resources sector.

The second witness in the SRC International suit against former prime minister Datuk Seri Najib Razak said the three entities were not legitimate funds, but were "pass through" entities for the purpose of concealing the misappropriation of assets.

She testified that none of the funds transferred out of the SRC BVI's BSI account appeared to have been used to ensure the long term supply of energy and natural resources, other than gas and oil for Malaysia, which was the purpose for which SRC International was established.

The companies were vehicles used to obfuscate the movement of funds misappropriated from SRC International, she said.

"They purported to hold legitimate investment portfolios and to be independent investment funds.

"Their true purpose was to operate as conduits, designed to allow money to be funnelled to third parties while providing a plausible but false representation that misappropriated funds had been 'invested'.

"They did not use monies received from SRC BVI to invest in legitimate investment portfolios and instead transferred funds to third parties almost immediately following receipt, upon instructions," said Barkhouse.

She was testifying during an online proceedings from the Cayman Islands before judge Datuk Ahmad Fairuz Zainol Abidin.

Barkhouse said her review of records obtained from the former liquidators of Cistenique and Enterprise showed a complex system of related-party loan agreements and promissory note issuances had been created by the operators and facilitators of Cistenique and Enterprise.

"(It was) to generate a paper trail to cover up the reality that they were conducting money laundering."

She said there were funds sent by SRC BVI to Enterprise that were shortly transferred to entity Blackstone Asia Real Estate Partners Ltd.

Another entity Muraset Limited received funds from SRC BVI as payment for three million shares in Gobi Coal & Energy Ltd (GCE).

"While this appears to be a transaction made in accordance with investment into the energy and resources sector, the acquisition of these shares was conducted in a less than straightforward manner."

She added that on Nov 27, 2011, SRC BVI transferred US$15 million to Muraset and a transfer of GCE shares took place on Jan 9, 2012, from Muraset to Gobi Resources and to SRV BVI.

On Feb 2, 2012, she said SRC BVI paid the balance of US$4.5 million to Gobi Resources, later known as JCL Resources Ltd after a merger.

"There seems little commercial sense in the transfers to Muraset or to Gobi Resources/JCL, a company which is linked to Jho Low.

"No basis for this payment has been identified and indicates that this was a mechanism to divert funds belonging to SRC International," she said, referring to fugitive businessman Low Taek Jho.

On May 7, 2021, SRC's new management initiated legal action against Najib, naming him as the first defendant, for alleged breach of trust and breach of statutory duty involving the RM4 billion Retirement Fund Incorporated loan to SRC.

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