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Arul Kanda, Irwan fail to quash 1MDB's US$6.59 billion suit

The High Court dismisses the duo's application to strike out the suit, saying the case must go to full trial and testimonials from witnesses need to be heard.

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Former 1MDB CEO Arul Kanda Kandasamy at the Kuala Lumpur court complex earlier this year. Photo: Bernama
Former 1MDB CEO Arul Kanda Kandasamy at the Kuala Lumpur court complex earlier this year. Photo: Bernama

The Kuala Lumpur High Court today dismissed former 1MDB CEO Arul Kanda Kandasamy and its former chairman Mohd Irwan Serigar Abdullah's bid to strike out a US$6.59 billion (RM33.5 billlion) suit filed by 1MDB against them.

High Court judicial commissioner Raja Ahmad Mohzanuddin Shah Raja Mohzan, in dismissing the duo's applications, ruled that the suit must go to full trial as the court needed to hear testimonials from the witnesses.

"The matter cannot be decided by affidavits, and this is not a case that can be summarily decided. Clearly, the allegation of fraud and conspiracy cannot be settled through a simple approach. Thus, I maintain the status quo, and the suit will go for a full trial.

"This is not an obvious matter for striking out but requires this court to investigate via full trial. Justice would still come to the rightful party, and it merely takes a longer journey to achieve it," Ahmad said.

He then ordered Arul Kanda and Irwan to pay RM10,000 each as costs to 1MDB and fixed Sept 14 for case management.

Lawyer Lim Chee Wee appeared for 1MDB, while lawyers Sanjay Mohan and Lavinia Kumaraendran represented Arul Kanda and Irwan, respectively.

Irwan filed the application to strike out the suit on Feb 18, 2022, on the grounds that it was premature as the investment of Brazen Sky Limited and the payment of Aabar Investments PJS Limited were clearly unsustainable since the court had yet to determine that 1MDB suffered losses of US$1.83 billion and US$3.5 billion.

Arul Kanda filed the same application on June 2, 2022, on the grounds that he cannot be held responsible for the losses incurred by 1MDB due to irregularities committed by others.

In May 2021, 1MDB filed a suit against the duo over an alleged breach of trust and conspiracy, causing 1MDB to suffer losses amounting to US$1.83 billion in relation to its investment in 1MDB-Petrosaudi Ltd, which was converted into the alleged Brazen Sky Limited investment, said to be found in the Bridge Global Fund.

1MDB also claimed that Arul Kanda and Irwan committed a breach of trust and conspiracy by misappropriating 1MDB’s funds, amounting to US$3.5 billion, paid to Aabar Investments, and US$1.265 billion, paid to International Petroleum Investment Company, on May 9, 2017.

1MDB alleged that Irwan also conspired with Arul Kanda to cause the company to implement the Employment Extension Agreement and made a substantial payment of RM2,905,200 to Arul Kanda in accordance with the agreement, regardless of 1MDB’s interests, causing the company to suffer losses and damage.

In this regard, 1MDB, among others, demanded that the two defendants pay US$6.59 billion for the breach and an additional RM2.9 million from Irwan in relation to the Employment Extension Agreement.