1MDB CEO resigns, banker Arul Kanda takes over

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(January 5): Malaysian strategic investor 1Malaysia Development Bhd (1MDB) chief executive Mohd Hazem Abdul Rahman is resigning from his job today and will be replaced by Abu Dhabi-based Malaysian banker Arul Kanda Kandasamy, sources say.

Arul, 38, will be made 1MDB group president and executive director. He has been an executive vice-president, head of Investment Banking Group and head of Corporate Finance Division, for the Abu Dhabi Commercial Bank since July 2008.

He had also served as a non-independent non-executive director of Malaysia's RHB Investment Bank Bhd from July 2009 to May 10, 2011, and as a director of RHB Islamic Bank Bhd, apart from being a non-independent non-executive director at RHB Capital Bhd from July 20, 2009 to May 10, 2011.

His predecessor, Hazem, joined 1MDB as the chief operating officer in August 2012.

The government-linked strategic investment has been hit by controversies over its debt portfolio and for keeping RM7.18 billion in the Cayman Islands.

Deputy Finance Minister Datuk Ahmad Maslan said last year 1MDB had already brought back 60% of its funds, and the balance 40% will return to Malaysia by end of 2014 although it had registered a return of 6% to 7% as of end of last year.

1MDB chairman Tan Sri Lodin Wok Kamaruddin last month said repatriating the funds back to Malaysia would have exposed the money to fluctuations on the foreign exchange market.

This follows the decline of ringgit in the past 10 months to RM3.52 against the US dollar today.

On December 22, Lodin said to maintain a strong liquidity position with a truly diversified global portfolio, the funds were invested in a 1MDB subsidiary that was registered in the Cayman Islands.

"However, the company has already redeemed a significant portion, US$1.4 billion (RM4.87 billion), of the fund and expects to redeem the remaining amount in the coming months," he said.

1MDB, which calls itself a strategic development company, has been criticised by former prime minister Tun Dr Mahathir Mohamad, who noted that a large part of the money raised from the issue of debt paper by 1MDB has been sent to the Cayman Islands, a move which many, including the opposition, had also questioned.

Critics have complained about the lack of transparency in how the money is managed out of the Caymans, and it has been estimated that at least RM18 billion of 1MDB's money is parked there.

Lodin had said there was nothing unusual about companies of 1MDB's size investing their funds in the Cayman Islands, pointing out that it is one of the largest registered fund jurisdictions internationally, with the Cayman Monetary Authority recognised as one of the leading fund regulators in the world.

To clarify, he said in 2009, 1MDB and a Saudi Arabian company entered into a joint venture to facilitate long-term economic cooperation between Malaysia and Saudi Arabia.

A joint-venture fund was set up to undertake investments on projects which would generate financial and strategic benefits to both countries but due to various factors, both parties decided against it.

As a result, he said 1MDB’s investment in the company was converted into a fixed income instrument in the form of Murahaba notes, essentially a loan, with an annual interest rate of 8.75%.

He said the loan was paid back in full, for US$2.318 billion with a profit of US$488 million, in 2013.

"Repatriating these funds to Malaysia would have exposed them to fluctuations on the foreign exchange market, as being witnessed at the moment," he said.

The Edge Financial Daily reported last month that the depreciating ringgit would hurt 1MDB, which has a sizeable chunk of its total RM42 billion in debts in the US dollar denomination.

This chunk, which amounted to RM22.25 billion according to 1MDB's financial statements for the financial year ended March 31, 2014, has now grown to about RM25.7 billion – an increase of about RM3.96 billion - due to the ringgit's decline by some 6.5% in 2014. – The Malaysian Insider
 

1MDB CEO resigns, banker Arul Kanda takes over

1MDB has been hit by controversies over its debt portfolio and for keeping RM7.18 billion in the Cayman Islands. Its CEO Mohd Hazem Abdul Rahman resigns today. – Reuters file pic, January 5, 2015.1MDB has been hit by controversies over its debt portfolio and for keeping RM7.18 billion in the Cayman Islands. Its CEO Mohd Hazem Abdul Rahman resigns today. – Reuters file pic, January 5, 2015.Malaysian strategic investor 1Malaysia Development Bhd (1MDB) chief executive Mohd Hazem Abdul Rahman is resigning from his job today and will be replaced by Abu Dhabi-based Malaysian banker Arul Kanda Kandasamy, sources say.

Arul, 38, will be made 1MDB group president and executive director. He has been an executive vice-president, head of Investment Banking Group and head of Corporate Finance Division, for the Abu Dhabi Commercial Bank since July 2008.

He had also served as a non-independent non-executive director of Malaysia's RHB Investment Bank Bhd from July 2009 to May 10, 2011, and as a director of RHB Islamic Bank Bhd, apart from being a non-independent non-executive director at RHB Capital Bhd from July 20, 2009 to May 10, 2011.

 

His predecessor, Hazem, joined 1MDB as the chief operating officer in August 2012.

 

The government-linked strategic investment has been hit by controversies over its debt portfolio and for keeping RM7.18 billion in the Cayman Islands.

Deputy Finance Minister Datuk Ahmad Maslan said last year 1MDB had already brought back 60% of its funds, and the balance 40% will return to Malaysia by end of 2014 although it had registered a return of 6% to 7% as of end of last year.

1MDB chairman Tan Sri Lodin Wok Kamaruddin last month said repatriating the funds back to Malaysia would have exposed the money to fluctuations on the foreign exchange market.

This follows the decline of ringgit in the past 10 months to RM3.52 against the US dollar today.

On December 22, Lodin said to maintain a strong liquidity position with a truly diversified global portfolio, the funds were invested in a 1MDB subsidiary that was registered in the Cayman Islands.

"However, the company has already redeemed a significant portion, US$1.4 billion (RM4.87 billion), of the fund and expects to redeem the remaining amount in the coming months," he said.

1MDB, which calls itself a strategic development company, has been criticised by former prime minister Tun Dr Mahathir Mohamad, who noted that a large part of the money raised from the issue of debt paper by 1MDB has been sent to the Cayman Islands, a move which many, including the opposition, had also questioned.

Critics have complained about the lack of transparency in how the money is managed out of the Caymans, and it has been estimated that at least RM18 billion of 1MDB's money is parked there.

Lodin had said there was nothing unusual about companies of 1MDB's size investing their funds in the Cayman Islands, pointing out that it is one of the largest registered fund jurisdictions internationally, with the Cayman Monetary Authority recognised as one of the leading fund regulators in the world.

To clarify, he said in 2009, 1MDB and a Saudi Arabian company entered into a joint venture to facilitate long-term economic cooperation between Malaysia and Saudi Arabia.

A joint-venture fund was set up to undertake investments on projects which would generate financial and strategic benefits to both countries but due to various factors, both parties decided against it.

As a result, he said 1MDB’s investment in the company was converted into a fixed income instrument in the form of Murahaba notes, essentially a loan, with an annual interest rate of 8.75%.

He said the loan was paid back in full, for US$2.318 billion with a profit of US$488 million, in 2013.

"Repatriating these funds to Malaysia would have exposed them to fluctuations on the foreign exchange market, as being witnessed at the moment," he said.

The Edge Financial Daily reported last month that the depreciating ringgit would hurt 1MDB, which has a sizeable chunk of its total RM42 billion in debts in the US dollar denomination.

This chunk, which amounted to RM22.25 billion according to 1MDB's financial statements for the financial year ended March 31, 2014, has now grown to about RM25.7 billion – an increase of about RM3.96 billion - due to the ringgit's decline by some 6.5% in 2014. – January 5, 2015.

- See more at: http://www.themalaysianinsider.com/malaysia/article/1mdb-ceo-resigns-ban...