Arul Kanda’s ex gratia RM5m is for contract extension


Former president and CEO of 1Malaysia Development Bhd (1MDB) Arul Kanda Kandasamy (picture) was given a RM5 million ex gratia payment for his six-month contract extension at the firm, said his lawyer Datuk N Sivananthan.

Sivananthan said the amount was approved by 1MDB’s board and shareholders last December.

“In December 2017, my client was asked to consider a one-year extension of his employment contract which was an option provided for in the original employment contract.

“After some negotiations, my client agreed to an extension of only six months, mutually agreed terms were negotiated and an employment extension agreement was duly executed,” Sivananthan said in a statement issued on behalf of Arul Kanda yesterday.

“Among others, the terms included a discretionary ex gratia payment.”

Sivananthan also said Arul Kanda was specifically recruited to deal with the pre-existing and critical debt situation of 1MDB.

Arul Kanda’s terms of employment were pursuant to negotiations and mutual agreement between the company and him.

His first day of employment at 1MDB was on Jan 5, 2015, for a threeyear period ended on Dec 31, 2017.

Sivananthan also said Arul Kanda had offered to resign in 2016 which was accepted by 1MDB’s board and shareholders.

“By March 2016, the framework for the 1MDB rationalisation plan was substantially in place. Accordingly, my client offered to resign during that time, and the board and shareholders of 1MDB agreed to the same.

“However, as a result of the legal dispute with International Petroleum Investment Co in April 2016, my client was asked to remain pursuant to the terms of the original employment contract,” Sivananthan added.

He also said during Arul Kanda’s tenure as 1MDB president, he was legally bound to execute the decisions, directions and instructions of the board and shareholders, which was to deal with the preexisting and critical debt situation of 1MDB.

Last week, Finance Minister Lim Guan Eng reportedly said the ministry will take legal action to recover RM2.5 million paid to Arul Kanda.

Lim said the ministry did not approve the payment, which was half of Arul Kanda’s RM5 million salary package for this year.

“We did not approve the RM2.5 million payment and legal action will be taken to recover the amount,” Lim told a press conference at the Parliament lobby last week.

He also said the Attorney General’s Chambers had been informed on the matter.