This article first appeared in The Edge Financial Daily on May 25, 2018

KUALA LUMPUR: Arul Kanda Kandasamy, the president and chief executive officer of beleaguered state fund 1Malaysia Development Bhd (1MDB), issued a statement yesterday distancing himself from the alleged wrongdoings that occurred at 1MDB, saying the problems were already there when he joined the fund in January 2015.

The statement, which he said was issued in his personal capacity and was of no relation to his employment at 1MDB, also highlighted that his focus has always been on the “business rationalisation” of the company.

He is also considering taking legal action against what he deemed “potentially defamatory and personal attacks” against him by Finance Minister Lim Guan Eng. Guan Eng issued a statement slamming him on Wednesday for claiming ignorance over the fund’s financial standing and investments at a meeting that same day.

“It cannot be disputed that I joined 1MDB only in January 2015, that is to say, after the actions of previous management and boards resulted in 1MDB amassing its debt burden, and after many of 1MDB’s projects were in difficulties.

“In short, I came in only after the occurrence of the alleged wrongdoings cited in the PAC (Public Accounts Committee) Report on 1MDB, the Auditor General Report on 1MDB and the DoJ (US Department of Justice) civil suit,” Arul Kanda said, referring to the DoJ’s civil forfeiture suit to seize assets the department claimed were amassed using funds siphoned from 1MDB.

“During the meeting referred to in the statement by the finance minister, I was asked many questions, which I answered truthfully and to the best of my recollection, but without the benefit of having any supporting documents with me at that moment. I therefore answered all the questions as best I could, truthfully and to the best of my knowledge, based on my recollection of company records, my personal knowledge [or lack thereof], and my recollection of information provided by officers in the company,” Arul Kanda said.

Hence, he felt it was unfair of the minister to issue a public statement, which he said did not fully and accurately represent how the questions were put and answered.

“The circumstances I was in and the context of my answers were conveniently left out such that it produced a false impression and put me in a bad light.

“More importantly, I strongly deny the potentially defamatory and personal attacks against me by the finance minister. Therefore, in my personal capacity, not in relation to my employment and specifically only in relation to his statement, I have sought legal advice from my lawyers to advise me on my options,” he added.

Arul Kanda’s position in 1MDB is now being reviewed, after Guan Eng instructed the ministry’s legal advisers to do so following the meeting on Wednesday, which was held with the objective of determining 1MDB’s financial status, especially with regard to its ability to repay and service its debts.

The meeting, however, left Guan Eng dissatisfied with Arul Kanda, who said he was on “garden leave” until the end of his contract in June 2018, and so was in the dark about 1MDB’s financial situation, according to Guan Eng’s statement. Arul Kanda had also claimed all financial matters were handled strictly by 1MDB chief financial officer, and so he had no knowledge about the value of certain investments said to be worth about RM9.8 billion, or whether they even existed.

Guan Eng, who also met with 1MDB’s board of directors comprising Datuk Norazman Ayob and Datuk Kamal Mohd Ali on the same day, was also informed by the duo that 1MDB was “insolvent” and thus unable to repay its debts.

According to news reports, Arul Kanda are among several individuals, including former prime minister Datuk Seri Najib Razak, who have been barred from leaving the country pending the new government’s new investigation into the alleged financial irregularities that occurred at 1MDB.

Sue if you want, Guan Eng tells Arul Kanda

In response to Arul Kanda’s statement, Guan Eng told reporters at a press conference yesterday that he is prepared to be sued by him.

“Arul Kanda has made many promises... if he wants to sue, we will be waiting for him. Of course I do not know whether he would do it or not, [though] he is free to do so.

“But Arul Kanda has to bear in mind that he is still 1MDB’s employee — he is the only 1MDB employee — and the ministry of finance owns 1MDB,” he said.

On whether the ministry plans to sack Arul Kanda, Guan Eng said, “let us take this step by step; if there is any developments, we will inform you”.

Asked what the government would do with 1MDB’s assets, Guan Eng added: “The ministry has not been able to ascertain whether the assets exist or not.”