KUALA LUMPUR (July 15): Former 1Malaysia Development Bhd (1MDB) president Arul Kanda Kandasamy is suing his former employer for a total amount of RM2.702 million — for loss of two months’ salary and to seek the balance of his bonus of RM2.5 million.

Arul Kanda filed the suit on May 22, through law firm Messrs Sanjay Mohan, after the High Court had rejected a part of his defence and counterclaim on Feb 7, this year.

1MDB has entered an appearance and is represented by Messrs Brendan Siva.

In his statement of claim (SOC), Arul Kanda said that he was approached by 1MDB in December 2014 to return to Malaysia and help with the restructuring and to reduce the debt of the company which had reached RM50 billion.

Following that, he joined 1MDB on Jan 5, 2015, to help resolve 1MDB’s critical debt default, monetise assets, restart stalled projects, and to develop and implement the rationalisation plan, and since his employment, he has taken various steps to reduce its debt.

“The plaintiff [Arul Kanda] states that via these measures, the debt of the defendant was reduced by approximately RM18 billion in a space of two years,” the SOC said.

Among the measures that Arul Kanda undertook include:

• Negotiating with lenders to avoid various events of default being formally called on various loans totalling billions of ringgit;
• Making payment of all interest and principal repayments on time;
• Restarting the stalled TRX project;
• Securing participation and multiple billions of ringgit of investment from various third parties such as Prudential, HSBC, Affin Bank, Mulia Group, and land lease for the TRX project;
• Recommencing and subsequently completing the stalled construction of eight air force bases in Malaysia;
• Sale of Edra equity for the sum of RM9.83 billion; and
• Sale of 60% Bandar Malaysia equity at RM7.41 billion.

Arul Kanda claimed that his employment contract ended on Dec 31, 2017, but prior to its expiration, he was requested by the 1MDB board to extend his employment contract, and on Feb 23, 2018, the employment extension agreement was executed.

Change of government

The former 1MDB president said the 1MDB board of directors and the Minister of Finance, Inc, as shareholder of 1MDB, approved the extension and hence he extended his stay until June 30, 2018.

Part of the agreement with the extension saw him being given an ex-gratia bonus of RM5 million following the successful measures taken as stated above and a salary of RM101,300.06 per month from January 2018 to June 2018.

He was paid RM2.5 million of the ex-gratia, but alleges not being paid the balance, and the remaining two months’ salary for May and June following a change in government in May 2018.

Arul Kanda claimed that upon the change of government, former finance minister Lim Guan Eng had made various allegations against him, including dishonesty, and untrustworthiness as published in an article that appeared in The Edge on May 24, 2018, which he claimed there was no basis for.

This, he added, formed the backdrop to the termination of the extension of his employment.

Following the change of government, Arul Kanda claimed that he was subject to investigations, had his account frozen, was not allowed to leave the country, and was charged with abetting former prime minister Datuk Seri Najib Razak with regards to the 1MDB audit-tampering case.

This, he claimed, had affected his reputation and livelihood, and as a result, warranted him seeking exemplary damages from 1MDB.

He was subsequently acquitted on the audit-tampering case, but is faced with the US$6.59 billion suit filed by 1MDB against him and Tan Sri Mohd Irwan Serigar Abdullah, which he claimed is mala fide and an abuse of the court process.

Following this, he is seeking a sum of RM202,600 for the loss of salary stipulated under the Employment Extension Agreement, along with the RM2.5 million balance of ex-gratia bonus, a declaration that the 1MDB civil suit filed against him and the conduct of the prosecution is for a collateral purpose and amounts to an abuse of process, with general and exemplary damages to be assessed.

On Feb 7, the High Court had dismissed Arul Kanda’s counterclaim that he filed last year, resulting in the filing of this suit.

However, on June 19, the Court of Appeal agreed to allow Arul Kanda’s appeal to reinstate the counterclaim.

A case management for this suit was held before High Court senior assistant registrar Sharifah Nur Nadhilah Syed Abu Bakar on Monday who fixed July 22 as another case management date.