High Court Orders Najib to Pay US$1.3bil to SRC over Breach of Fiduciary Duty

Why It Matters

The decision reinforces rule‑of‑law accountability for senior officials, threatening Najib’s political resurgence and signaling stricter oversight of Malaysia’s sovereign wealth assets.

Key Takeaways

• High Court holds Najib liable for $1.3 billion damages.
• Judgment splits $1.18 billion loss and $120 million fiduciary breach.
• Court cites Najib’s abuse of power as Prime Minister‑Finance Minister.
• Najib created “adviser emeritus” role to control SRC decisions.
• Appeal filed; interim stay granted, payment delayed 14 days.

Summary

The Kuala Lumpur High Court ruled former Prime Minister Datuk Seri Najib Razak liable for more than US$1.3 billion in damages to SRC International, a subsidiary of the 1Malaysia Development Berhad (1MDB) retirement fund. Justice Ahmad Fu’s decision, delivered on Tuesday, found Najib responsible on two counts: US$1.18 billion for the loss of proposed investment funds tied to a RM4 billion loan from the Quap fund, and an additional US$120 million as compensation for a fraudulent breach of fiduciary duties.

The judgment details how Najib, then both Prime Minister and Finance Minister, intervened directly in Quap’s leadership to secure the loan, overriding standard lending limits and expediting approvals. He also created an “adviser emeritus” position within SRC, using it to dictate investment strategy and demand board reports on all material matters, effectively centralising control and misappropriating funds for personal gain.

Justice Ahmad Fu described Najib’s conduct as a systematic abuse of power, rebuking the concentration of authority in a single individual. The court’s written decision highlighted the unprecedented nature of the breach, noting that no public official should wield unchecked influence over sovereign wealth assets. Najib’s counsel, Tanri Muhammad Shafi Abdullah, immediately signalled an appeal and secured a 14‑day interim stay on the payment.

The ruling underscores Malaysia’s tightening legal scrutiny of the 1MDB scandal and signals a broader push for corporate governance reforms. While the appeal process may delay actual payment, the judgment sets a powerful precedent that high‑level officials can be held financially accountable for fiduciary violations, potentially reshaping investor confidence and political dynamics ahead of upcoming elections.

Original Description

The High Court has allowed a US$1.3bil lawsuit filed by SRC International Sdn Bhd against Datuk Seri Najib Razak over breach of fiduciary duty and misfeasance in public office, linked to a RM4bil loan from the Retirement Inc Fund (KWAP) to SRC.

Justice Ahmad Fairuz Zainol Abidin, who is now a Court of Appeal judge, found that Najib was liable to account for and pay the sum of US$1.18bil and US$120mil to SRC.

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