‘Coal mining project never materialised despite millions paid’
LUMPUR: A coal mining project in Mongolia never materialised even though US$60 million was paid by SRC International Sdn Bhd to its subsidiary SRC BVI for a joint venture with an Abu Dhabi company called Aabar, the High Court heard.
SRC BVI liquidator Angela Barkhouse, who is the second witness to testify in SRC International’s US$1.18 billion civil suit against former prime minister Datuk Seri Najib Tun Razak, said SRC BVI entered into a joint venture with Aabar on Nov 3, 2011 with the primary objective of investing in projects involving renewable energy resources, natural resources and minerals.
“Aabar-SRC was incorporated on Oct 25, 2011 and the directors of the company were former SRC chief executive officer Nik Faisal Ariff Kamil and Datuk Suboh former SRC director Md Yassin, as well as Aabar’s former CEO Mohamed Badawy Al-Husseiny.
“The terms of the agreement 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.
“Aabar-SRC acquired 14 million shares in Gobi Coal & Energy Limited (GCE) on or around Dec 8, 2011 for US$91 million. GCE holds the rights to two large open cut coal mines in Mongolia,” she said in her witness statement.
Barkhouse said Aabar-SRC acquired its shares in GCE in advance of a planned IPO in 2012 and the funds from the preIPO 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 and 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,” she said.
Subsequently, Barkhouse said on Dec 6, 2011, shortly after US$91 million was paid by Aabar-SRC to GCE, a few other payments were made in the name of GCE including US$8.99 million to Blackstone Asia Real Estate Partners Limited and US$4.99 million to Globalink Aviation Limited.
However, Barkhouse said she was unable to identify the beneficial owner of Globalink. Previously, in another trial involving Najib, it was reported that Blackstone Asia Real Estate Partners was a shell company set up by fugitive businessman Low Taek Jho, or Jho Low, and it carried a similar name to real estate private equity firm Blackstone Real Estate.
The witness said the timing of the transactions from GCE to Blackstone and Globalink, which occurred shortly after the payment from Aabar-SRC to GCE, indicated that these payments could be ‘kickbacks’ for the US$91 million investment into GCE.
SRC, under its new management, filed the suit in May 2021, claiming that Najib had committed breach of trust and power abuse, personally benefited from the company’s funds, and misappropriated the said funds.
The company is seeking a court declaration that Najib is responsible for the company’s losses due to his breach of duties and trust and that they demand Najib to pay back the RM42 million in losses they suffered.
Najib, 70, has been serving a jail sentence at the Kajang Prison since Aug 23, 2022, after being convicted of misappropriating RM42 million in SRC International funds.
He then filed a petition for a Royal pardon on Sept 2, 2022, and the Pardons Board on Jan 29 reduced his jail term from 12 years to six, with the fine cut to RM50 million from RM210 million. The trial before Judge Datuk Ahmad Fairuz Zainol Abidin continues on March 25.