KUALA LUMPUR, Aug 2 — Former prime minister Datuk Seri Najib Razak must explain why his administration awarded Arul Kanda Kandasamy a RM5 million contract to remain 1MDB president, DAP’s Tony Pua said today.

The Damansara MP also demanded Najib explain how Arul “successfully” managed to reduce 1MDB’s RM50 billion debt to RM30 billion, which the latter asserted yesterday. 

“The question which begs to be asked is, why pay the purportedly brilliant Arul Kanda a whopping RM5 million contract and then place him immediately on ‘garden leave’?” Pua said in a statement.

The DAP national publicity secretary pointed out that Najib’s explanation yesterday was the first time he admitted that 1MDB had accumulated RM50 billion of debt as a result of the company’s excesses since its inception in 2009.

Pua also disputed the “success” of Arul’s efforts in trimming the state investment firm’s debt burden, noting that assets were sold for less than what the firm paid.

“The first thing Arul Kanda did was to dispose of 1MDB’s only profit-making asset, its power plants for RM9.83 billion, ‘successfully’ paring down 1MDB’s debt by an equivalent amount.  

“However, as highlighted many times — 1MDB’s energy business was originally acquired for RM12.1 billion, which meant that the sale crystalised a loss of RM2.27 billion for 1MDB,” Pua said.

He added that Arul had also transferred the ownership of 1MDB’s real estate assets to the Finance Ministry and had justified the move as based on “advice” from Parliament’s Public Accounts Committee.  

Pua said the truth was that the Tun Razak Exchange and Bandar Malaysia land came attached with a RM2.4 billion sukuk bond and a RM800 million loan from the Social Security Organisation (Socso).

“Very cleverly, Arul Kanda successfully reduced 1MDB’s debt by another RM3.2 billion.

“Then the masterstroke from Arul Kanda must have been the ability to disingenuously announce that 1MDB has been successfully servicing and repaying approximately RM7 billion of its debts over the course of the past year, when in reality, it was MoF which was forced to secretly finance these payments,” Pua said.

Najib claimed yesterday that Arul gave up higher pay to join 1MDB, after it was revealed the latter was offered RM5 million to do so.

Najib also argued the remuneration was justified given the former executive’s performance, despite the recent release of the Auditor General’s report on the state investment firm showing its debt mountain remained largely intact despite a so-called “rationalisation”.

Finance Minister Lim Guan Eng disclosed the pay package this week, before saying the government will not pay the remainder of the RM2.5 million due to Arul.

Lim further revealed the RM5 million package was personally approved by Najib and signed off by former Treasury Secretary-General Tan Sri Irwan Serigar.

Arul, 41, a law graduate from the London School of Economics, took over as 1MDB president and group executive director on Jan 6, 2015.

It was reported that he was sacked on June 28, two days earlier than when his contract tenure ended, with sources claiming he was not paid his May and June salaries nor given his contractual bonus.