KUALA LUMPUR: Despite a US$60 million sum paid by SRC International's SRC BVI for a joint venture agreement with the Abu Dhabi government, coal mining works in Mongolia failed to take off, the High Court heard today.
Angela Barkhouse, a British financial investigations expert, said SRC BVI entered into a joint venture with Aabar UAE on Nov 3,2011 and the company, called Aabar-SRC, was incorporated in the British Virgin Islands (BVI)on Oct 25 that year.
She said the agreement's terms read that SRC BVI and Aabar UAE each held 50 per cent shares of the company and were to contribute a sum of US$500 million, with an initial contribution of US$60 million.
The 17 February 2012 Resolution had provided for US$60 million from the Retirement Fund Inc (KWAP) loans to be paid to a joint venture between SRC BVI and Abu Dhabi government, she added.
On Nov 21,2011, SRC International paid US$60 million from its AmBank account to the Aabar-SRC BSI Account and Aabar UAE transferred the same sum into the same account later, she said.
Barkhouse said Aabar-SRC acquired 14 million shares in Gobi Coal & Energy Limited (GCE) on or around Dec 8,2011 for US$91 million.
She said GCE holds the rights to two large open cut coal mines in Mongolia.
"Aabar-SRC acquired its shares in GCE in advance of a planned 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 boost the value of the coal at IPO.
"There is no evidence that this IPO took place.
"Information from GCE indicated 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 International, 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$35 million.
"It is not clear why, in the ten years since the investment was made, this road has apparently not been completed," the second witness testified during online proceedings from the Cayman Islands before judge Datuk Ahmad Fairuz Zainol Abidin.
Barkhouse is the managing director of Quantuma International, an international advisory firm which specialises in forensic accounting and investigations, among others.
She said Aabar-SRC's directors were Nik Faisal Ariff Kamil and Datuk Suboh Md Yassin, former SRC chief executive officer and former director respectively, both named as defendant and third party respectively in SRC International's lawsuit against former prime minister Datuk Seri Najib Razak.
Aabar-SRC's primary objective of investing in projects associated with the exploration, extraction, processing, logistics and trading of conventional and renewable energy resources, natural resources and minerals and other related activities and other investments, she added.
On May 7, 2021, SRC's new management initiated legal action against Najib, naming him as the first defendant, for alleged breach of trust and breach of statutory duty involving the RM4 billion Retirement Fund Incorporated loan to SRC.
SRC sought several declarations such as including Najib as being liable to account for and pay the sum of US$ 1.18 billion being the loss of the proposed investment funds.It includes a declaration that Najib and Nik Faisal must return the sum of US$120 million and US$2 million respectively.
The trial continues tomorrow.