Can Arul Kanda and Irwan Serigar escape liability for 1MDB losses?

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Defence Argues Against Liability for 1MDB Losses by Arul Kanda and Mohd Irwan

The legal representatives for former 1Malaysia Development Berhad (1MDB) chief executive officer Arul Kanda Kandasamy and its former chairman Tan Sri Mohd Irwan Serigar Abdullah have contended that their clients cannot be held liable for the company's financial losses. The defence's argument centres on the timing of their appointments and the alleged lack of direct causal links between their actions and the purported damages suffered by 1MDB. The court is expected to deliver its decision on August 23 regarding the application to strike out the suit.
Arul Kanda's Defence on Timing and Implication

Sanjay Mohan, counsel for Arul Kanda, submitted that the issues concerning 1MDB's financial losses were already being raised in 2014, prior to his client's appointment as CEO in 2015. Mohan asserted that Arul Kanda was part of a new management team and has not been implicated in any wrongdoing. He further argued that the allegations made by the plaintiff, 1MDB, are unsubstantiated by evidence, particularly as investigations into 1MDB's transactions between 2010 and 2014 began before Arul Kanda's tenure.
Mohd Irwan's Counsel Questions Direct Link to Losses

Representing Mohd Irwan, counsel Lavinia Kumaraendran argued that her client joined the 1MDB board in 2016. She posited that there is no direct evidence connecting Mohd Irwan's actions to the alleged losses. Kumaraendran also stated that the sustainability of investments like Brazen Sky Limited and payments to Aabar Investments PJS Limited remains undetermined by the court, and that 1MDB's suit against Mohd Irwan is therefore premature.
1MDB's Counterargument for Full Trial

Lawyers for 1MDB, including Brendan Siva and Datuk Lim Chee Wee, countered the defence's applications by asserting that the matter necessitates a full trial. They argued that it is 1MDB's responsibility to ensure all parties are questioned to facilitate the recovery of missing funds. The plaintiff's legal team emphasised that the suit aims to establish what actions the defendants ought to have taken and failed to undertake, specifically regarding their failure to inquire, investigate, and ascertain the status of 1MDB's various failed investments and to recover the associated funds.
Specific Claims and Alleged Misappropriation

The lawsuit, filed by 1MDB in May 2021, seeks to recover alleged losses amounting to US$1.83 billion related to an investment in 1MDB-Petrosaudi Ltd, which was reportedly converted into the Brazen Sky Limited investment. Further claims include US$3.5 billion paid to Aabar Investments and US$1.265 billion paid to International Petroleum Investment Company (IPIC). Additionally, 1MDB alleged that Mohd Irwan conspired with Arul Kanda to implement an Employment Extension Agreement, resulting in a substantial payment of RM2,905,200 to Arul Kanda, which caused losses to the company regardless of 1MDB’s interests.

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Can Arul Kanda and Irwan Serigar escape liability for 1MDB losses?

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