‘My removal from TRX City and Bandar Malaysia expected’

KUALA LUMPUR (May 9): 1Malaysia Development Bhd (1MDB) president Arul Kanda Kandasamy has yet to receive any “official notification” of being removed from the board of TRX City Sdn Bhd and Bandar Malaysia Sdn Bhd.

However, Arul Kanda told The Edge Financial Daily that his removal from the board of the two companies was expected simply because both TRX City and Bandar Malaysia have been transferred by 1MDB to the finance ministry (MoF) Inc effective March 31.

“It is only reasonable to expect that MoF Inc will seek to appoint new directors, per its discretion,” he said in a text message.

The news comes on the heels of TRX City’s termination of the 60% stake sale in Bandar Malaysia to IWH CREC Sdn Bhd for RM7.41 billion last Wednesday. TRX City claimed that the IWH CREC failed to meet payment obligations, hence the stake sale was called off.

However, IWH CREC disputes TRX City’s claim of its failure to make payments. IWH CREC is a 60:40 joint venture between Iskandar Waterfront Holdings Bhd (IWH) and state-owned China Railway Engineering Corp (M) Sdn Bhd (CREC). Businessman Tan Sri Lim Kang Hoo holds a 63% stake in IWH, while Kumpulan Prasarana Rakyat Johor Sdn Bhd owns the remaining 37%.

The termination caught many off guard. The sudden abortion of the deal has sparked rumours of the potential buyers who would emerge in the massive development project.

Arul Kanda, an old boy of the Royal Military College, received credit for being able to divest some of the assets in cash-strapped 1MDB to raise fresh cash to pare down debts. The sale of a 60% stake in Bandar Malaysia is one of them. He had also sealed the deal to sell 1MDB’s power assets to China General Nuclear Power Corp in 2015.

The 41-year old was appointed to restructure the controversial debt-laden 1MDB then.

Last month, 1MDB reached a settlement with International Petroleum Investment Co PJSC (IPIC) over arbitration proceedings at the London Court of International Arbitration.

The settlement sparked debate as to whether the Malaysian government had given in too much to compromise on paying US$1.2 billion (RM5.2 billion) to IPIC for a US$1 billion loan and US$200 million interest payment that IPIC had paid on behalf of 1MDB in 2015, while the dispute over US$3.5 billion security deposit paid by 1MDB to IPIC remained unresolved.

This article first appeared in The Edge Financial Daily, on May 9, 2017.

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