KUALA LUMPUR – Arul Kanda Kandasamy, the former CEO of 1Malaysia Development Bhd (1MDB), testified in the high court today that he did not ask why the company’s two auditors were terminated.
1MDB’s auditors, Ernst & Young (EY) and KPMG were dismissed in 2010 and 2013, respectively.
Arul Kanda clarified that he did not inquire about the matter because he only joined the sovereign wealth fund in 2015.
The first defendant was responding to a question from 1MDB’s counsel, Datuk Lim Chee Wee during the hearing of the USD6.59 billion lawsuit against him and former chairman of the board Tan Sri Mohd Irwan Serigar Abdullah.
Lim: Did you engage with the stakeholders of your former auditors, namely EY and KPMG, to understand why they resigned or were terminated?
Arul Kanda: No.
When asked by judge Datuk Raja Ahmad Mohzanuddin Shah Raja Mohzan if he had seen reprimanded reports (reports containing negative audit findings) from KPMG, Arul Kanda replied: “I do not know if there are any reprimanded reports”.
In May 2021, 1MDB filed a suit against the two individuals, accusing them of breach of trust and conspiracy, which led to losses of US$1.83 billion, linked to the company’s investment in 1MDB-Petrosaudi Ltd, which was subsequently converted into the Brazen Sky Ltd 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 in company funds paid to Aabar Investments and US$1.265 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 in damages from both defendants and an additional RM2.9 million from Mohd Irwan related to the extension of the employment agreement.
The hearing resumes tomorrow. – January 16, 2025