1MDB's US$700m could've been recovered from Jho Low - ex-CEO

Former 1MDB CEO Arul Kanda Kandasamy said in the High Court today that the US$700 million (RM3.15 billion) transferred to Good Star Limited could have been recovered had he directed legal action for its recovery.

The first defendant was questioned by 1MDB’s counsel Lim Chee Wee at the corporation’s US$6.59 billion (RM29.7 billion) lawsuit against him and former chairperson of the board Mohd Irwan Serigar Abdullah.

Lim: Do you know that Low Taek Jho, or Jho Low, was the beneficiary owner of the Good Star?

Arul Kanda: Yes, we found out the info through the Auditor-General’s Department, definitely during the Parliament Public Accounts Committee hearing. But I can’t recall the specific date.

For the record, the US$700 million transaction occurred in 2009, six years before Arul Kanda (above) was appointed CEO.

When Lim asked whether Arul Kanda, as president and director at the time, was aware of the fund transfer to Good Star, Arul Kanda responded that he became aware of it in 2016, but not before that.

Lim: Have you, with your knowledge, instructed lawyers to pursue the recovery of the US$700 million?

Arul Kanda: It’s a bit speculative, but yes, I agree, if I had done that at that time, yes, it may be possible that we would have recovered this fund.

In his witness statement, Arul Kanda said that he did not know about any fraud or wrongdoing when he joined the company on Jan 5, 2015.

“There were many senior-level former management individuals who handled and were directly responsible for various operational, administrative, financial, reporting, legal, and other activities of the company.

“These individuals had been carrying out their roles and working on various transactions well before I joined the company and continued to do so after I joined. Again, at that time, I had no reason to suspect these individuals of any wrongdoing.

“Hence, I was justified in asking them for information and relying on information they shared with me and explanations they provided to me on various matters under their scope of responsibility,” said Arul Kanda.

1MDB’s lawsuit

In May 2021, 1MDB filed a lawsuit against the two individuals, accusing them of breach of trust and conspiracy, which led to losses of US$1.83 billion (RM8.2 billion), linked to the company’s investment in 1MDB-Petrosaudi Ltd, which was subsequently converted into the Brazen Sky Limited investment, purportedly recoverable from the Bridge Global Fund.

1MDB also alleged that both defendants committed breach of trust and conspiracy by misappropriating US$3.5 billion (RM15.7 billion) in company funds paid to Aabar Investments and US$1.265 billion (RM5.7 billion) paid to International Petroleum Investment Company on May 9, 2017.

1MDB further alleged that Mohd Irwan conspired with Arul Kanda to extend his employment agreement, resulting in a payment of RM2,905,200 to Arul Kanda, all while disregarding the company’s interests, which ultimately led to financial losses and damages.

Consequently, 1MDB is seeking US$6.59 billion (RM29.7 billion) in damages from both defendants and an additional RM2.9 million from Mohd Irwan related to the extension of the employment agreement.

The hearing before Judge Raja Ahmad Mohzanuddin Shah Raja Mohzan resumes tomorrow.

- Bernama

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