‘Board approved ex-gratia payment’
KUALA LUMPUR: The ex-gratia payment to former 1Malaysia Development Bhd (1MDB) chief executive officer Arul Kanda Kandasamy was approved by the company’s board of directors and shareholders.
Arul Kanda’s lawyer, N. Sivananthan, said his client had been specifically appointed to manage the “critically debt laden” company and all the terms and conditions of his employment had been agreed upon by both parties.
“His first day on duty was on Jan 5, 2015, and he was appointed for a three-year term, which was supposed to end on Dec 31 last year. By March 2016, he had succeeded in working out a rationalisation plan for 1MDB and everything was on track.”
Sivananthan said 1MDB’s board and shareholder — the Finance Ministry — had agreed to let Arul Kanda leave, but rescinded the decision a month later.
He said Arul Kanda was asked to stay because of the legal dispute with the International Petroleum Investment Company.
“My client was asked to remain, pursuant to the terms of the original employment contract.”
It was reported that Arul Kanda was recruited from Abu Dhabi Commercial Bank, where he was the head of investment banking involved in financial restructuring exercises.
Sivananthan said Arul Kanda was asked to consider a one-year contract extension in December last year, but only agreed to a sixmonth extension after some negotiations.
He said, among others, the terms included a discretionary ex-gratia payment, which was approved by the board and shareholder of 1MDB.
“I wish to make it absolutely clear that during the period my client was employed as the president of 1MDB, he was legally bound to execute the decisions, directions and instructions of the 1MDB board and the shareholder, which was to deal with the preexisting and critical debt situation of 1MDB.”
It was reported that Arul was paid RM5 million ex-gratia for the six-month extension on top of his salary.
He had, however, only received half of the payment because his tenure was terminated by the government following Barisan Nasional’s defeat in the 14th General Election.