PUTRAJAYA (June 19): The Court of Appeal on Wednesday partly allowed 1Malaysia Development Bhd’s (1MDB) former president Arul Kanda Kandasamy to amend his statement of defence to include his counterclaim to seek outstanding salary and bonuses from the company, in a suit filed by 1MDB against him and former Treasury secretary general Tan Sri Dr Mohd Irwan Serigar Abdullah.

Judge Datuk Azizah Nawawi, who led the bench, allowed the appeal by Arul Kanda to amend his statement of defence to include the counterclaim.

Azizah said the bench was unanimous in making the decision, and that there are merits in Arul Kanda’s appeal for this matter to be included in his defence and counterclaim.

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She made no order as to costs.

Azizah sat with appellate court judges Datuk Lim Chong Fong and Datuk Dr Choo Kah Sing.

1MDB was represented by Brendan Navin Siva and Aida Haryani Salamon, while Sanjay Mohan along with Adam Lee and Hing Hong Jer appeared for Arul Kanda.

On Feb 7, the High Court dismissed Arul Kanda’s application to amend his defence and add the counterclaim over the termination of his contract extension.

Arul Kanda, who was acquitted in the 1MDB audit tampering trial with former prime minister Datuk Seri Najib Razak in March last year, is seeking via the counterclaim close to RM57 million in aggravated, exemplary and general damages from 1MDB following his dismissal.

Arul Kanda claimed that around Feb 23, 2018, 1MDB had entered into an employment extension agreement with him, which was approved by 1MDB’s board of directors and Minister of Finance Inc - 1MDB’s sole shareholder.

Among the conditions were to extend Arul Kanda's employment to June 30, 2018, and to pay him an ex-gratia bonus of RM5 million - of which RM2.5 million remains unpaid.

In addition, he said 1MDB did not pay his salary for May and June.

“The ex-gratia bonus payment paid to me was a result of my various achievements when employed by 1MDB that resulted in a reduction in its debt by approximately RM20 billion,” the former 1MDB president claimed.

1MDB filed the US$6.59 billion suit against Arul Kanda and Mohd Irwan in May 2021, claiming that the duo are liable for breach of duties and breach of trust that resulted 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 subsequently converted into an investment in Bridge Global Fund.

It also alleged that Arul Kanda and Mohd 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 International Petroleum Investment Company (IPIC) - and subsequently paying another US$1.265 billion to IPIC in May 2017.

With Wednesday’s decision, Arul Kanda would be required to submit the amendment, and 1MDB to possibly make amendments to its statement of claim.

The 1MDB suit against Arul Kanda and Mohd Irwan is fixed for hearing before Judicial Commissioner Datuk Raja Ahmad Mohzanuddin Shah Raja Mohzan in September. 

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