KUALA LUMPUR: Arul Kanda Kandasamy was promised a bonus after he agreed to sign a six-month extension at the end of his three-year term in December, his lawyer said today as Finance Minister Lim Guan Eng continues to question his predecessor Najib Razak over RM5 million in payment to the former 1MDB CEO.
His counsel N Sivananthan said Arul was “specifically recruited” to find a solution to 1MDB’s debt problems for a 36-month contract from January 2015 to Dec 31, 2017.
He said when the 1MDB rationalisation plan was “substantially in place” in March 2016, Arul had offered to resign but was told to stay over a legal dispute involving the International Petroleum Investment Company (IPIC).
He said as Arul’s contract came to an end in December last year, he was again asked to consider an extension.
“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,” he said.
Among the terms, said Sivananthan, was a “discretionary ex-gratia payment” approved by the company’s board and shareholders. He added that Arul was legally bound to execute the decisions of the board in addressing 1MDB debts.
It was revealed last week that Arul had been promised a RM5 million payment covering a six-month period up to June 30 this year, when his contract ended.
Arul’s contract came to an abrupt end when the Pakatan Harapan government sacked him just two days short of its expiry.
After Lim questioned the huge sum, Najib defended it by saying it was an ex-gratia payment for Arul, whom he said had earned more as head of investment at Abu Dhabi Commercial Bank.
Lim later demanded that the former prime minister show proof that Arul’s salary at 1MDB was lower than what he earned as a senior investment banker in the Middle East, but Najib said he had never suggested anything about Arul’s salary.
Arul’s lawyer today did not divulge his client’s salary as an investment banker in the UAE.
“He was involved in a number of large and complex financial restructuring exercises of companies in the Middle East. These included public-listed and government-owned companies,” he said in a statement.
He added that his client was legally bound to execute the decisions, directions and instructions of the 1MDB board and shareholders “to deal with the pre-existing and critical debt situation of 1MDB” throughout his period of employment as 1MDB president.