UPDATED 10AM | 1MDB has terminated the service of its president and chief executive officer, Arul Kanda Kandasamy, effective yesterday.

The letter of termination, sighted by Malaysiakini said that Arul Kanda is found to have "breached the contract and fiduciary duty" as the head of 1MDB.

The decision to terminate Arul Kanda's service was made during a board meeting on June 25, and the said letter was served to him yesterday, said sources.

Malaysiakini has contacted Arul Kanda for comment.

Arul Kanda was first appointed to lead 1MDB in January 2015, when the company faced cashflow problems and could not meet debt obligations.

He was later given another six months extension in January this year and the termination of his service comes two days ahead of his contract expiry on June 30. 

Malaysiakini had previously reported that the previous BN administration had agreed to an RM5 million ex-gratia payment for Arul Kanda, and to place him on garden leave until his contract expiry on June 30. 

Finance Minister Lim Guan Eng had revealed in May that the government paid close to RM7 billion on behalf of 1MDB to bail it out.

Contrary to the claims by 1MDB that it was capable of paying its own debts, the minister said that 'the sum included payments made to the International Petroleum Investment Company (IPIC) as part of the settlement agreement, amounting to RM5.05 billion.'

The minister also called out Arul for allegedly being 'utterly dishonest and untrustworthy', after the latter had briefed him on the state of 1MDB.

This was denied by Arul Kanda, who stated that it was unfair for him to be painted in such bad light as he had strived to brief the ministry to the best of his ability and in view of the fact he only joined the company in 2015, well after "the actions of previous management and boards resulted in 1MDB amassing its debt burden, and after many of 1MDB's projects were in difficulties."

Arul Kanda had also toured around the country in the run-up of the 14th general elections in May to explain issues surrounding the sovereign wealth fund.

In an interview with Malaysiakini, he stressed that the tour, dubbed the '1MDB roadshow', was part of his duty to explain 1MDB's position.

A lawyer by training, Arul Kanda graduated with a law degree from the London School of Economics and a masters in International Finance Law from University College London.

He then joined a French investment bank on management consulting and specialised in securitisation.

Arul joined Barclay Capital in 2006 and later Abu Dhabi Commercial Bank (ADCB) in 2008.