Tuesday, May 09, 2017

The Ministry of Finance must explain the alleged “conflict of interest” which was the basis Arul Kanda was sacked from the Boards of TRX City and Bandar Malaysia

Last week, I had asked the Ministry of Finance (MoF) to sack Arul Kanda, if he failed to offer his resignation for his role in the entire collapse of the 1MDB rationalisation exercise.

Two quick succession of events over the past few weeks have completely unravelled the painstaking effort by the Najib administration to put a lid on the 1MDB scandal over the past two years.

Firstly, the MoF agreed to assume the liabilities amounting to USD3.5 billion for bonds issued by 1MDB but previously guaranteed by Abu Dhabi's International Petroleum Investment Corporation (IPIC). This concession only confirms what 1MDB had repeatedly claimed, that it has already paid IPIC USD3.51 billion is untrue.

Instead the funds were paid to a fraudulent company, Aabar Investment PJS Limited set up in the British Virgin Islands "Aabar(BVI)", which IPIC had denied any relation to. The question hence arises as to where did this money go to ultimately, especially since Aabar(BVI) has already been liquidated.

Secondly, Arul Kanda needs to be responsible for the collapse of the RM7.41 billion sale of 60% interest of Bandar Malaysia to a consortium led by Iskandar Waterfront Holdings (IWH). The question also now arise as to who will refund the 10% deposit or RM741 million which have been paid to 1MDB as Bandar Malaysia has since been taken over by MoF in March this year.

In a surprising turn of events, the MoF has actually sacked Arul Kanda from the Board of Directors of Bandar Malaysia and TRX City, even as he remains as the President and CEO of 1MDB.

The Malaysian Insight quoted sources that “there are potential conflicts of interest”.  This is shocking as Arul should only be acting in the interest of the Malaysian Government or by extension, the tax-payers of Malaysia.  What “conflict of interest” could it be which resulted in his sudden removal from the Board of Directors?

Arul Kanda tried to make light of the situation by claiming that it is the prerogative of the Ministry of Finance to remove him from the Boards.  He argued, even as he has yet to receive notification of his removal, that the two companies were transferred from 1MDB to Minister of Finance Inc (MOF Inc) with effect from March 31, 2017.  Hence “it is only reasonable to expect that MOF Inc will seek to appoint new directors, per its discretion”.

Few would believe that his removal really has nothing to do with the collapse of the Bandar Malaysia deal, one way or another.  If the intent was to remove him as ownership has been transferred to the Ministry of Finance, why wait until 2 days after the IWH deal turn sour?  Why didn’t the switch take place in March itself, when the transfer was executed?

Regardless, the Ministry of Finance must come clean with the very serious issue of “conflict of interest” which has resulted in Arul’s sacking.

The next question on everyone’s mind is, now that Arul Kanda has lost the confidence of the Ministry of Finance, will his role as the President and CEO of 1MDB remain tenable, and for how long?

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