KUALA LUMPUR (Feb 22): Former Treasury secretary-general Tan Sri Mohd Irwan Serigar Abdullah has applied to strike out a US$6.59 billion suit filed against him and former 1Malaysia Development Bhd (1MDB) president Arul Kanda Kandasamy.
Irwan Serigar has also filed his defence and a counterclaim to 1MDB’s suit. All the applications were filed last Friday (Feb 18) through the firm of Messrs Lavania & Balan Chambers.
His counsel Lavinia Kumaraendran confirmed the filing of the application to theedgemarkets.com when contacted on Tuesday.
Meanwhile, Arul Kanda had filed his defence on Feb 20, through the firm of Messrs Sanjay Mohan.
Case management was held on Tuesday before High Court senior assistant registrar Azlinda Ahmad Sharif, who instructed the parties to exhaust the affidavits on the application to strike out (after which a hearing date would be set).
The next case management has been set for April 20.
1MDB filed the suit against the duo accusing them of alleged breach of fiduciary duty, fraud, conspiracy, breach of trust and dishonest assistance.
The statement of claim said Arul Kanda and Irwan Serigar are liable for fraudulent breach of duties and fraudulent breach of trust, resulting in the company paying a sum of US$1.83 billion to 1MDB PetroSaudi Ltd, which was converted into stakes in a company called Brazen Sky and then converted into an investment in Bridge Global Fund.
1MDB is also claiming that the duo committed fraudulent breach of duties and breach of trust against International Petroleum Investment Corporation (IPIC) and Aabar PJS, resulting in a payment of US$1.265 billion to IPIC on May 9, 2017 as part of a consent award and US$3.5 billion being misappropriated from the company to Aabar BVI.
In total, 1MDB is claiming US$6.59 billion from the duo as a result of the purported breach and an additional RM2.9 million against Irwan Serigar for fraudulent breach of duties and trust resulting in an extension employment agreement.
In his defence, Irwan Serigar said he had been part of the civil service for 34 years — since 1984 — and had held various posts until his retirement in 2018. The former senior government officer claimed that as 1MDB had filed various other suits against him, the suit against him amounted to a substantial overlap with the other suits and hence, the company is estopped from seeking the same reliefs.
He pointed out that 1MDB had entered into settlement with Goldman Sachs, Deloitte PLT and AmBank, among others, premised on the same allegations and relief sought.
Irwan Serigar argued that 1MDB's claim against him on Brazen Sky (2009-2012) and the US$3.5 billion payment to Aabar that occurred prior to February 2015 should be barred under Section 6 of the Limitation Act 1953, as the suit was filed last May and fell outside the six-year limitation period.
He further contended that the federal government had full control or exercised absolute control of 1MDB's affairs, where all approvals were brought to the Cabinet for deliberation, and to then prime minister Datuk Seri Najib Razak, who also held the finance portfolio, for approval.
Irwan Serigar argued that Article 117 of 1MDB's Memorandum of Articles, stipulated that key decisions regarding the company require written approval and consent from Najib and this includes any financial commitment (including investment) restructuring or any other matters likely to affect the guarantee given by the federal government for the company's benefit.
Following the Public Accounts Committee (PAC) report on 1MDB, Irwan Serigar said he was appointed chairman of the company sometime on May 31, 2016, where he was involved in the company's restructuring, appointing an auditor and raising revenue and inviting investors to settle 1MDB’s debts.
Until his resignation as 1MDB chairman on May 23, 2018, Irwan Serigar claimed that to the best of his abilities he had done all that was reasonably necessary to ascertain and investigate the financial standing of 1MDB and its subsidiaries, including 1MDB’s investment in Brazen Sky.
Irwan Serigar further contended that in the Brazen Sky losses, the proper parties that should be held responsible were senior management of 1MDB that comprised seven individuals: Tan Sri Che Lodin Wok Kamaruddin, Tan Sri Ismee Ismail, Datuk Shahrol Azral Ibrahim Halmi, Azmi Tahir, Tan Sri Ong Gim Huat, Ashwin Jethanand Vikran and Terence Geh.
On IPIC, Irwan Serigar claimed that it was a collective decision by the 1MDB board to pursue any impending arbitration, and defended 1MDB's position in regard to the US$3.5 billion payment. He maintained that the recording of the settlement deed, supplemental deed and consent award with IPIC was done at the express instruction of Najib.
“This was in spite of the then board that included him (Irwan Serigar) taking the view that the arbitration should be defended,” he said.
On his counterclaim, Irwan Serigar said the suit filed against him is an abuse of process. “The filing of the action is politically motivated against me, seeing that it is only commenced after the change in federal government after the 14th general election.”
In his defence, Arul Kanda denied that he had breached his duties, committed fraud or fraudulent breach of trust as claimed against him.
“There were ongoing investigations by the authorities and as such there was no need to carry out internal investigations. Investigations were carried out and there was no finding of guilt or liability against 1MDB officers (including him).
“Even the PAC report had recommended action against Datuk Shahrol only,” Arul Kanda said, adding he was not involved with the company from 2009 to 2014,” he said.
Moreover, he claimed that the former board of directors, employees, and management concealed information from him and as such he could not launch an investigation against the former employees.
He also contended that he had no alternative but to follow the instructions of the shareholder.
“The first defendant (Arul Kanda) was entitled to assume that the former PM cum finance minister will act in the best interests of the Malaysian public.”
Arul Kanda also denied the allegation that the employment extension agreement of his employment in 1MDB was a sham.
Instead, he contended that 1MDB breached the terms of his extension employment agreement by failing to pay a sum of RM200,000 for the month of May and June 2018, as well as an ex-gratia payment of RM2.5 million.