1MDB altered its case against ex-chairman, High Court told

KUALA LUMPUR: Former 1MDB chairman Irwan Serigar Abdullah has urged the High Court to dismiss the company’s claims for damages against him, arguing that the sovereign wealth fund fundamentally changed its case because it could not prove he caused its losses.

Defence counsel K Lavinia said yesterday that 1MDB’s original claim was limited to losses arising from the Brazen Sky investment and payments to Abu Dhabi state-owned International Petroleum Investment Company (IPIC) and Aabar Investments PJS.

However, it is now seeking RM15.62 billion based on its current financing liabilities and accumulated interest.

Lavinia said this amounted to a complete departure from the company’s pleaded case.

She also argued that Irwan had been made a “convenient defendant”, as the disputed transactions took place between 2009 and 2014, years before he became chairman in May 2016.

In her submissions before trial judge Raja Ahmad Mohzanuddin Shah Raja Mohzan, she said 1MDB’s own pleadings and evidence identified its former board and senior management as those responsible for the transactions.

However, she noted that the company had withdrawn its action against them.

She submitted that 1MDB failed to prove causation, saying the alleged losses had already crystallised before Irwan assumed office.

She said the case law relied on by 1MDB concerned fraud cases in which the defendants directly caused the losses, whereas no fraud had been alleged against Irwan.

Lavinia also said 1MDB’s own witness, director Afidah Azwa Abdul Aziz, accepted that the company’s debts arose from financing facilities approved in 2009, and that Irwan was not responsible for creating its current indebtedness.

She further argued that any damages awarded would amount to double recovery, as 1MDB had already recovered about US$7.9 billion through settlements with the US justice department, AmBank, Deloitte and KPMG, among others.

She said that having recovered sums exceeding its alleged losses, 1MDB could not seek further compensation from Irwan.

She added that, as a government-owned company, 1MDB’s directors operated within a unique governance framework and were required to consider the government’s interests as a shareholder, rather than being judged solely by the standards applicable to directors of ordinary private companies.

She urged the court to dismiss the suit.

In 2021, 1MDB sued Irwan and former president and CEO Arul Kanda Kandasamy over the Brazen Sky investment, payments to Aabar and IPIC, and the extension of Arul Kanda’s employment contract.

The company is seeking US$6.59 billion in damages and a further RM2.9 million relating to the alleged contract extension.

Counsel for 1MDB, Lim Chee Wee, is scheduled to reply on July 16.