KUALA LUMPUR (Jan 14): When shown US Department of Justice (DOJ) action documents for 2017 and 2021, former 1Malaysia Development Bhd (1MDB) president Arul Kanda Kandasamy agreed that 1MDB funds following two bond energy deals in 2012, and two Deutsche Bank loans in 2014, had made their way to “MO1”, his wife Datin Seri Rosmah Mansor, fugitive businessman Low Taek Jho (Jho Low), Jho Low’s associate Eric Tan Kim Loong, film producer Riza Aziz, rapper Kasseem Dean, and then-managing director of International Petroleum Investment Company (IPIC) Khadem al-Qubaisi.
“MO1” refers to “Malaysian Official 1”, which was the code used to refer to then-prime minister Datuk Seri Najib Razak.
1MDB counsel Raphael Kok Chi Ren showed the DOJ documents to Arul Kanda at the High Court on Tuesday, after which Arul Kanda agreed that according to the DOJ, the funds amounting to hundreds of millions of US dollars were used to purchase movable and immovable assets like real estate property for Riza and Jho Low, jewellery for Rosmah, movie financing and movie posters for Riza’s Red Granite Capital Ltd, and a Gulfstream jet and a luxury superyacht named Topaz.
These properties are subject to DOJ forfeiture action, but Arul Kanda told judge Datuk Raja Ahmad Mohzanuddin Shah Raja Mohzan that he does not know at what level the DOJ’s complaint was at, as the alleged crimes had not been heard and decided by the court in the US.
“Hence, I want to clarify that [despite what has been publicly claimed], the complaint has not been heard and decided in court,” Arul Kanda said.
Replying to questions from Kok, Arul Kanda said he only knew about what was alleged in the US a day or two after the DOJ made it public in 2017, while he was still with 1MDB.
The former 1MDB president and director emphasised that he had nothing to do with the fraudulent transfer, as it had happened sometime between 2012 and 2014, while he had only been hired by 1MDB in January 2015.
DOJ documents show that in 2012, US$3.5 billion bond deals, going through 1MDB’s subsidiaries 1MDB Energy Ltd (1MEL) and 1MDB Energy Langat Ltd, were used for the acquisition of two independent power producers, namely Tanjong Energy Holdings Sdn Bhd and Mastika Lagenda Sdn Bhd.
The DOJ, as revealed by Kok, had shown that a portion of the funds from the issuance of the two bonds had made its way from Aabar PJS Ltd BVI or Aabar PJS Ltd (Seychelles) to Red Granite and Riza, Jho Low, Tan, Kasseem (also known as Switzz Beatz, who is married to singer Alicia Keys) and al-Qubaisi.
The documents also showed that “MO1” @ Najib was also a beneficiary, and the funds from the bonds were also used to purchase 27 bracelets and necklaces for Rosmah at a cost of more than US$1.3 million.
US court documents show that Red Granite had used the funds to make movies like The Wolf of Wall Street and purchase property in New York and Los Angeles, while al-Qubaisi used it to pay for his Gulfstream jet and a portion of the funds were used to pay for the luxury superyacht named Topaz.
Arul Kanda said that he only knew about all this after they were made public, as claimed by the DOJ, and he had no personal knowledge of them.
Kok: Are you aware that the DOJ has made efforts to recover them or not?
Arul Kanda: I do recall the recovery of the assets made, but I cannot name specific examples to show.
Kok: I put it to you the suspicious nature of the agreement, and in your position (as the then-president) that you ought to take steps to recover the assets for offshore and onshore from Aabar PJS BVI.
Arul Kanda: I had concerns, as described in the DOJ lawsuit, and am assisting the various Malaysian authorities who are investigating the various transactions.
US$6.59 billion suit against Arul Kanda and Irwan
The former 1MDB top executive was testifying in a US$6.59 billion lawsuit by 1MDB against him and former Treasury secretary general Tan Sri Dr Mohd Irwan Serigar Abdullah, who was formerly the 1MDB chairman of the board of advisors.
1MDB filed the suit against Arul Kanda and Irwan in May 2021, alleging that they are liable for breaches of duties and trust, resulting in the company suffering losses amounting to US$1.83 billion in relation to its investment in 1MDB-PetroSaudi Ltd, which was converted into stakes in Brazen Sky Ltd, and then converted into an investment in Bridge Global Fund.
1MDB also alleges that Arul Kanda and Irwan had committed breach of trust and conspiracy, by misappropriating US$3.5 billion of 1MDB money and paying it to Aabar Investments PJS Ltd — a shell company pretending to be a subsidiary of IPIC — and subsequently paying another US$1.265 billion to IPIC in May 2017.
1MDB also claimed that Irwan had conspired with Arul Kanda to cause the fund to implement an employment extension agreement that resulted in it paying RM2.91 million to Arul Kanda.
Besides this suit by 1MDB, Arul Kanda has filed a counterclaim, seeking a return of the payment and bonus that were entitled to him when he was removed from 1MDB in 2018, after Pakatan Harapan won the May 2018 general election.
On Monday (Jan 13), Arul Kanda had testified that in 2015 and 2016, various investigations were conducted by the Malaysian authorities, none of which suggested that there was any wrongdoing.
“However, the Public Accounts Committee in its report on April 7, 2016 makes it clear that the authorities were to carry out the necessary further investigations,” he told the court.
The former 1MDB top executive also referred to the Swiss Federal Criminal Court decision in August last year, which had not made a finding of any wrongdoing by the 1MDB board with regard to its dealings with PetroSaudi International Ltd (PSI) — which led to the 1MDB board to believe that PSI had links with the Saudi Arabian government, and that PSI would contribute significant oil assets to the joint venture.
“The Swiss Federal Criminal Court further stated that (PSI founders) (Patrick) Mahony and Tarek (Obaid) knew that the statements were false. Therefore, given this finding by the Swiss Federal Criminal Court, there is no basis for the allegations against me (with regard to the PSI deal),” he said.
Arul Kanda: We never gave up rights to take legal action
Kok then asked why no action was taken, despite having known of the questionable transactions with regard to the two bonds and the loans from Deutsche Bank in 2017. Arul Kanda emphasised that the various authorities were investigating the board, and it was therefore best to let the authorities investigate it.
“(The position of the board is to) leave it to the authorities. The Attorney General’s Chambers also issued a statement (on taking appropriate action).
“What we knew at that time was that payment was made to the Aabar entities. Our concern was, who did we pay the sums to? We also have the IPIC dispute and settlement, which we claimed in the arbitration process.
“We (1MDB) were concerned about who we paid, and who we are recovering from. 1MDB retains the right to recover the US$3.5 billion. At that point of time, the management had not considered (taking action) on IPIC and Aabar by filing a claim against them. We will definitely consider (taking action) when a decision is made,” Arul Kanda added.
The hearing before Raja Ahmad Mohzanuddin Shah resumes on Wednesday with continued cross-examination of Arul Kanda.