Arul Kanda, Irwan cannot be liable for 1MDB’s losses, court told

 

1MDB filed the suit against Arul Kanda Kandasamy (left) and Irwan Serigar Abdullah, alleging that they had committed breach of trust and conspiracy against the sovereign wealth fund.

KUALA LUMPUR: The High Court here was told today that former 1MDB chief executive officer Arul Kanda Kandasamy and its former chairman Irwan Serigar Abdullah could not be held liable for losses incurred by the company due to irregularities committed by others.

Counsel Sanjay Mohan, who acted for Arul Kanda, submitted that the issue pertaining to 1MDB’s financial losses was raised in 2014, a year before his client’s appointment in the company.

“The allegation raised by the plaintiff (1MDB) was made without any evidence. The investigation against 1MDB started on Feb 27, 2015, pertaining to its transactions between 2010 and 2014. My client was part of the new management. He was never implicated in any way,” Sanjay said.

Meanwhile, counsel Lavinia Kumaraendran, representing Irwan, argued that the former Treasury secretary-general was appointed to the 1MDB board in 2016 and there was no direct link that the purported losses were the result of his wrongdoings.

“The investment of Brazen Sky Limited and the payment of Aabar Investments PJS Limited were clearly unsustainable, as the court had yet to determine that 1MDB suffered losses of US$1.83 billion (RM8.05 billion) and US$3.5 billion (RM15.4 billion),” she said adding that the plaintiff’s suit against Irwan was premature.

The lawyers said this in their argument to strike out a US$6.59 billion suit filed by 1MDB against Arul Kanda and Irwan before judicial commissioner Raja Ahmad Mohzanuddin Shah Raja Mohzan.

Meanwhile, lawyer Brendan Siva, who represented 1MDB, countered that the suit must go for a full trial as it was the responsibility of 1MDB to make sure all parties were questioned to recover the missing funds.

Lawyer Lim Chee Wee, also representing 1MDB, said the suit was to prove what Arul Kanda and Irwan ought to have done and what they failed to do at the time.

“They failed to inquire, investigate and ascertain 1MDB’s various failed investments and to recover the funds,” said Lim.

After hearing submissions from all parties, Raja Ahmad fixed Aug 23 to deliver his decision.

In May 2021, 1MDB filed a suit against the duo over an alleged breach of trust and conspiracy, causing 1MDB to suffer losses amounting to US$1.83 billion, in relation to its investment in 1MDB-Petrosaudi Ltd, which was converted into the alleged Brazen Sky Limited investment, said to be found in the Bridge Global Fund.

1MDB also claimed that Arul Kanda and Irwan committed a breach of trust and conspiracy by misappropriating 1MDB money, amounting to US$3.5 billion, paid to Aabar Investments and US$1.265 billion, paid to International Petroleum Investment Company (IPIC), on May 9, 2017.

1MDB alleged that Irwan also conspired with Arul Kanda to cause the company to implement the Employment Extension Agreement, and made a substantial payment of RM2,905,200 to Arul Kanda in accordance with the agreement, regardless of 1MDB’s interests, causing the company to suffer losses and damage.

In this regard, 1MDB, among others, demanded that the two defendants pay US$6.59 billion for the breach, and an additional RM2.9 million from Irwan in relation to the Employment Extension Agreement. - FMT