Delivering his closing submissions in SRC International Sdn Bhd’s US$1.18 billion civil suit against the former prime minister, lawyer Farhan Shafee argued that the directors were not legally compelled to comply with instructions from the shareholder.
“Therefore, they cannot hide behind the veil of shareholder’s instructions,” he said.
He said SRC was established under the purview of the Ministry of Finance Incorporated (MOF Inc) and that Najib, then the finance minister, was its sole shareholder.
Farhan said several former directors had testified to having exercised independent judgment in their decisions.
His arguments came a day after SRC, in its closing submissions, insisted that Najib could not shift responsibility to the board as he himself had failed to exercise due diligence in securing RM4 billion in loans from Retirement Fund Inc (KWAP).
Farhan argued that the directors’ first act of negligence occurred at the company’s inaugural board meeting in 2011, setting a precedent for mismanagement.
“Although the (first half of the loan) application was made by the management beforehand, acceptance of the loan was vested with the board,” he said, adding that it was within the board’s jurisdiction to say “yes” or “no”.
“They should have deferred (that decision). Although they felt there’s pressure coming from the first defendant (Najib) to accept (the loan), what was stopping them?” he said.
He said the board could have asked then CEO Nik Faisal Ariff Kamil to relay their concerns to Najib, and their failure to do so amounted to negligence.
Farhan also dismissed the directors’ claims that they had no choice but to comply as Najib had the power to hire and fire, saying such fears were “illusionary”.
He said none of the directors were threatened at the time.
“If you know your decision is right, so be it, the law has remedies. You can take it to the Industrial Court if you have to.
“If the composition of ‘we have to listen to the government of the day’ is accepted in this court, what message do we send for corporate governance?” he said.
Justice Ahmad Fairuz Zainol Abidin said he needed time to deliberate and would fix another date for the decision.
“The monkey is now on my back. Please bear with me,” he said.
SRC International is suing Najib and Nik Faisal, who remains at large, for allegedly misappropriating company property and dishonestly conspiring to convert it to their own use.
The suit originally included former SRC chairman Ismee Ismail, as well as former directors Suboh Yasin, Shahrol Azral Ibrahim Halmi, Azhar Osman Khairuddin and Che Abdullah @ Rashidi Che Omar, as co-defendants.
SRC later dropped the case against them. However, they were added as third parties by Najib.
Najib was convicted of misappropriating RM42 million from SRC International and has been serving his sentence at Kajang prison since Aug 23, 2022.
He filed a petition for a royal pardon on Sept 2, 2022.
The Federal Territories Pardons Board later halved his prison term from 12 years to six and reduced his fine from RM210 million to RM50 million.