I assumed Najib knew about 1MDB monies going through fiduciary funds, ex-bank officer tells court

KUALA LUMPUR: A former Singaporean bank officer has told the High Court that he assumed Datuk Seri Najib Razak knew about the flow of funds transacted by 1Malaysia Development Bhd (1MDB) and three companies through fiduciary funds.

Kevin Michael Swampillai, 59, who is the ex-head of wealth management services at BSI Bank, testified that he formed the impression based on the fact that SRC International Sdn Bhd – one of the 1MDB-linked clients of BSI – was a company owned by the Finance Ministry at the time when Najib was finance minister.

"Najib was the chairman of the board of advisors in 1MDB and furthermore 1MDB was wholly owned by the Finance Ministry," he said at Najib's trial involving RM2.28bil funds from 1MDB on Wednesday (March 1) here.

The witness, who was reading his witness statement, said that SRC International had initiated the use of fiduciary funds in 2011.

"Within a fairly short period of time these fiduciary fund transactions were also undertaken by various related and affiliated companies such as 1MDB, Brazen Sky Ltd and Aabar BVI, which also became clients of BSI," he said.

Investments in fiduciary funds are often directed by the investor (client) and the fund manager's role is to carry out the client's instructions by implementing such instructions.

This is unlike traditional investment funds, where investments are decided and managed by fund managers on a discretionary basis.

"The primary objective of clients when using fiduciary funds is to facilitate the flow of money to a particular destination of their choosing, whilst also obscuring the identity of the investor," Swampillai said.

The witness also said that the origin of the use of such fiduciary funds by companies such as 1MDB, SRC, Brazen Sky and Aabar could be traced back to a meeting he had with fugitive businessman, Low Taek Jho, or better known as Jho Low, in 2011, who had queried on the inner workings of fiduciary funds with BSI.

He said that Low had implied to BSI on numerous occasions that he was an advisor to Najib, which Swampillai had heard from his superiors.

"The common denominator prevalent in all these accounts or companies was the presence of Jho Low and the fact that all these companies came under the auspices of the Finance Ministry in Malaysia," Swampillai said.

With all the information that came out about 1MDB since 2015, Swampillai said it was evident to him that Low intended for the fiduciary funds to give an "optical illusion" to various stakeholders in Malaysia and elsewhere that the funds belonging to SRC, 1MDB and Aabar were invested in bona fide investment instruments.

According to Swampillai, after persistent questioning by BSI on the final destination and use of funds channelled through the fiduciary funds, Low's consistent response was that these transactions were highly confidential, government-to-government investments and therefore no further information could be made available.

"Finally, the size of these transactions were of such a high magnitude and frequency that they had to have some kind of apex approval such as that issued by a highly placed government official such as a prime minister," the witness said.

Najib, 70, is on trial for 25 charges in total – four for abuse of power that allegedly brought him financial benefit to the tune of RM2.28bil; and 21 for money laundering involving the same amount of money.

The hearing before Justice Collin Lawrence Sequerah continues on Thursday (March 2).