Why was the loan amount reduced from RM3.95bn to RM2bn?

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The loan amount was reduced due to internal assessments and directives that did not initially support the full requested sum, leading to revised proposals.

The initial RM3.95 billion loan proposal from SRC International Sdn Bhd to KWAP, which bore a handwritten approval note from Datuk Seri Najib Razak dated June 5, 2011, did not compel KWAP's investment panel to approve the full amount. KWAP's former CEO, Datuk Azian Mohd Noh, testified that neither she nor the KWAP chairman had instructed the Fixed Income Department to draft an investment paper for the entire RM3.95 billion. Instead, the Fixed Income Department prepared an initial paper proposing that KWAP consider lending only RM1 billion.
Internal Assessment Led to Reduced Loan Proposals

Following SRC International's initial proposal, KWAP's Fixed Income Department assessed the request and prepared an investment paper that recommended considering a loan of RM1 billion, significantly less than the RM3.95 billion sought. This paper was approved by an investment committee chaired by Azian for presentation to KWAP's investment panel on July 5, 2011. Azian confirmed that at no point did she or the Fixed Income Department indicate an obligation to approve the loan based on the Prime Minister's note, and that no one at KWAP interpreted the June 2011 letter as an instruction to disregard loan procedures.
Prime Minister's Directive Influenced Revised Loan Amount

During a subsequent meeting on July 19, 2011, where a revised loan amount was considered, Azian informed the investment panel that the KWAP chairman had been told by Prime Minister Najib Razak to "expedite" the loan to SRC International, and that RM2 billion would be sufficient. This directive from the Prime Minister appears to have influenced the subsequent reduction in the loan amount sought by SRC International.
SRC International Formally Adjusted Loan Request

Subsequently, SRC International formally adjusted its request. A letter dated August 12, 2011, from SRC International to Azian indicated a departure from the initial RM3.95 billion loan plan, with the company now seeking a RM2 billion loan from KWAP, to be backed by a government guarantee. This revised request was then processed, leading to the preparation of a third investment paper by KWAP's Fixed Income Department, which ultimately resulted in the approval of the RM2 billion loan in August 2011.

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Why was the loan amount reduced from RM3.95bn to RM2bn?

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