Lawyers hint at Irwan Serigar and Arul Kanda trying to cover up irregularities in 1MDB
Submissions continued yesterday, Monday 25 May 2026, in 1Malaysia Development Bhd’s (1MDB) civil suit against former chairman Tan Sri Dr Mohd Irwan Serigar Abdullah and former president Encik Arul Kanda Kandasamy, with 1MDB’s lawyer asserting that the pair ignored 10 major red flags linked to the fund’s alleged misappropriation, The Edge Malaysia reported yesterday.
Arul Kanda’s counsel, on his part, accused 1MDB of "pulling out red flags here and there every other week" like magician David Copperfield.
1MDB's counsel, Encik Raphael Kok Chi Ren from Lim Chee Wee Partnership, told the High Court that while financial misappropriation in 1MDB had already happened before the arrival of Arul Kanda and Irwan, they ignored these red flags when they took up their appointment.
Kok submitted that despite numerous red flags, neither men pursued meaningful investigations. Instead, they allegedly reassured auditors and 1MDB’s board that the assets remained intact even as concerns mounted internally and externally of 1MDB’s plunging debts and non-existent assets.
The lawyer said the issue further escalated in mid-2016 when the US Department of Justice (DOJ) publicly exposed alleged misappropriation linked to 1MDB. At the same time, Abu Dhabi’s International Petroleum Investment Company (IPIC) and its unit Aabar Investments PJS denied responsibility for obligations under a debt-for-assets swap arrangement known as the binding term sheet (BTS), which had been intended to eliminate about US$6 billion of 1MDB debt.
Kok submitted that in April 2017, Arul Kanda and Irwan caused 1MDB to enter into a settlement with IPIC that was “onerous” and “one-sided”. Under the settlement, 1MDB allegedly agreed to pay US$1.2 billion, abandon claims against IPIC, and release IPIC from obligations tied to approximately US$6 billion in debt.
He also submitted that both men knew that the settlement terms were commercially unfavourable and were aware of legal advice describing the arrangement as heavily skewed against 1MDB’s interests.
He said the misconduct was not the theft of monies itself but the concealment of irregularities and the failure to investigate suspicious transactions tied to Aabar-linked entities.
The 10 “red flags” cited by the lawyer that allegedly should have triggered investigations from both men include repeated failures to transfer assets under the BTS agreement, unresolved concerns raised by auditors from Deloitte over the companies' debts, the Public Accounts Committee (PAC) report highlighting irregularities, and the asset forfeiture by the DOJ.
Arul Kanda’s lawyer urges court to consider 1MDB counsel's submissions with caution
In his reply to Kok, Arul Kanda’s lawyer, Encik Sanjay Mohan from Sanjay Mohan Advocates and Solicitors, urged presiding judge Datuk Raja Ahmad Mohzanuddin Shah Raja Mohzan to consider the 1MDB lawyer's submissions with caution.
Noting that 1MDB’s lawyers had at the start of the trial stipulated that there were five major red flags, Sanjay said there are now 10 red flags in submissions at the end of the trial.
“They are like David Copperfield, My Lord, pulling out red flags here and there. Every other week, there is a different red flag,” he said.
Sanjay arugued that the 1MDB legal team's submissions must be limited to what they had pleaded at the onset of the trial.
“So, what we say, My Lord, is that the plaintiff's submissions contain many, many, many things which are not needed, not in evidence. And they look, and they draw conclusions not supported by the evidence at all,” he said.
On 1MDB's allegation that Arul Kanda had concealed information to cover up for the fund in 2015, the lawyer noted that the information about 1MDB’s troubles were already in the news via a Wall Street Journal article earlier in that year and Malaysian investigations were already ongoing later that same year.
“How do you concede something which is already in the public domain? From February 2015, from the Wall Street Journal article, the issue of fraud was already out there in the public domain. The whole world knew about it. Investigations commenced in the following month, on the 4th of March, 2015. So, what is it that the first defendant (Arul Kanda) has concealed?
“How do you concede something which is already out in the public domain, already being investigated, where the law has already been questioned, when the auditor general looked at it, when the PAC looked at it, when the Singapore authorities looked at it, when the Swiss authorities looked at it? What is it that is being conceded?" Sanjay asked.
Submissions continued today, Tuesday 26 May 2026.
1MDB filed the suit in May 2021, claiming both Arul Kanda and Irwan, who was also the Treasury secretary general when he held the post in 1MDB, were liable for breaches of duties and trust, resulting in the company suffering losses amounting to US$1.83 billion in relation to its investment in 1MDB-PetroSaudi International Ltd, which was converted into stakes in Brazen Sky Ltd and then converted into an investment in Bridge Global Fund.
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