Federal Court dismisses two ex-1MDB board members’ bid to exit US$6.59b lawsuit, they remain as third parties against Irwan, Arul Kanda

PUTRAJAYA, Jan 6 — Two former board members of 1Malaysia Development Berhad (1MDB) will remain as third parties in the 1MDB US$6.59 billion lawsuit that was filed against former 1MDB chairman Tan Sri Mohd Irwan Serigar Abdullah and former 1MDB chief executive officer Arul Kanda Kandasamy.

This follows the decision by the Federal Court’s three-man panel today to dismiss the leave to appeal applications brought by the former board members Datuk Kamal Mohd Ali and Datuk Seri Norazman Ayob.

The duo had sought leave to appeal the appellate court’s decision that had ordered for their inclusion as third parties in the 1MDB suit.

The Federal Court panel presiding today comprised Chief Judge of Sabah and Sarawak Tan Sri Abdul Rahman Sebli and Federal Court judges Datuk Nordin Hassan and Datuk Abdul Karim Abdul Jalil.

Delivering the court’s unanimous decision, Justice Abdul Rahman said it is not a fit and proper case for the court to exercise its discretion to grant leave under Section 96 of the Courts of Judicature Act 1964. He ordered the duo to pay RM30,000 in legal costs.

On Nov 6 last year, the Court of Appeal allowed Mohd Irwan’s appeal to include three individuals, including Kamal and Norazman, as third parties in the suit. This led Kamal and Norazman to apply for leave to appeal in the Federal Court.

Former 1MDB chief financial officer Azmi Tahir was also brought in as a third party in the 1MDB suit but he did not apply for leave to appeal at the Federal Court. This means he would also remain as a third party in the suit.

On May 30 last year, Mohd Irwan filed an ex-parte application against six individuals, seeking indemnity or contribution in the event he is found liable for the lawsuit filed by 1MDB against him and Arul Kanda.

On Sept 6 last year, Judicial Commissioner Datuk Raja Ahmad Mohzanuddin Shah Raja Mohzan granted the application of the six individuals, including Kamal, Norazman Ayob and Azmi, to strike out the third-party notice filed by Mohd Irwan.

The other three individuals were former chairman Tan Sri Lodin Wok Kamaruddin; former chairman Datuk Seri Asri Hamidin @ Hamidon; and current chairman Datuk Seri Johan Mahmood Merican. At the Court of Appeal, Mohd Irwan did not pursue his appeals against the other three individuals.

In May 2021, 1MDB filed a lawsuit against Mohd Irwan and Arul Kanda, accusing them of breach of trust and conspiracy that resulted in losses of US$1.83 billion related to the company’s investment in 1MDB-Petrosaudi Ltd, which was later converted into the Brazen Sky Limited investment, said to be recoverable from the Bridge Global Fund.

1MDB also alleged that both defendants committed breach of trust and conspiracy by misappropriating US$3.5 billion in company funds paid to Aabar Investments and US$1.265 billion paid to International Petroleum Investment Company on May 9, 2017.

1MDB claimed that Mohd Irwan colluded with Arul Kanda to execute an extension of an employment agreement, paying a substantial amount of RM2,905,200 to Arul Kanda, disregarding 1MDB’s interests, which resulted in losses and damages to the company.

Consequently, 1MDB is seeking US$6.59 billion in damages from both defendants for these violations, and an additional RM2.9 million from Mohd Irwan related to the extension of the employment agreement.

In today’s proceedings before the Federal Court, lawyers Lavinia Kumaraendran and Mavin Thillainathan represented Mohd Irwan while lawyer Razlan Hadri Zulkifli represented Kamal and Norazman.

Lavinia told the media that the trial at the High Court is set to resume on Jan 13, with Arul Kanda expected to take the stand. — Bernama