Why did SRC International agree to pay RM9.2 billion for RM4 billion loans?

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SRC International Agreed to RM9.2 Billion Repayment Due to Bai' al-'inah Facility Terms

SRC International Sdn Bhd agreed to repay RM9.2 billion for two loans totalling RM4 billion from the Retirement Fund (Incorporated) (KWAP) due to the structure of the loan agreement, which employed a Shariah-compliant repayment method known as Bai' al-'inah. This method involved two distinct transactions for each loan, effectively inflating the repayment amount.
Bai' al-'inah Structure and Repayment Calculation

Under the Bai' al-'inah facility, each RM2 billion loan was subject to two transactions. First, an asset sales agreement occurred where KWAP sold the loan to SRC International for RM4.6 billion. Subsequently, an asset purchasing agreement took place where KWAP repurchased the asset for RM2 billion. This structure, incorporating a 12 per cent interest rate, meant that SRC International was obligated to repay RM4.6 billion for each RM2 billion loan, leading to a total repayment commitment of RM9.2 billion for the combined RM4 billion in loans.
Loan Terms and Repayment Period

The agreement stipulated that the total repayment of RM9.2 billion would be settled by 2022. This repayment period extended for approximately 10 years from the initial disbursement of the loans in 2011 and 2012. The detailed terms of these transactions were handled by the legal firm Hisham, Sobri & Kadir, where the prosecution's witness, Mohd Suhaimi Ismail, was a senior partner at the time.
Context of the Loans and SRC International's Status

The loans were granted by KWAP to SRC International in August 2011 and March 2012. At the time of the first loan application, SRC International was a wholly-owned subsidiary of 1Malaysia Development Berhad (1MDB), which in turn was owned by the Ministry of Finance Inc. By the time of the second loan, SRC International was directly under the purview of the Ministry of Finance Inc. The total outstanding debt to KWAP was previously reported as RM4.15 billion as of May of the current year.

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Why did SRC International agree to pay RM9.2 billion for RM4 billion loans?

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