Trinna Leong
Straits Times
10th May 2017

Minister and 1MDB president are said to be no longer in charge of key projects linked to state fund

The fallout continues over the aborted Bandar Malaysia property development deal, as reports emerged yesterday that key personnel tasked with negotiating the multibillion-dollar project have been relieved of their duties.

Malaysia’s Second Finance Minister Johari Abdul Ghani and troubled state fund 1Malaysia Development Berhad’s (1MDB) president Arul Kanda Kandasamy were part of the so-called Budiman committee, a government unit set up to manage restructuring and divestment of 1MDB assets. The Malaysian Insight (TMI) reported that both men and the committee are no longer spearheading 1MDB-linked prime developments in Kuala Lumpur, namely Tun Razak Exchange and Bandar Malaysia.

The news comes after the government’s sudden decision last Wednesday to abort a RM7.41 billion (S$2.4 billion) deal inked in 2015 to jointly develop Bandar Malaysia, the country’s biggest property project on the fringes of Kuala Lumpur, with private conglomerate Iskandar Waterfront Holdings (IWH) and China Railway Engineering Corp (CREC).

TMI said on Monday that Mr Arul had been removed from his board positions in Bandar Malaysia and TRX City. The latter owns the Bandar Malaysia land. TMI said, quoting sources, that his dismissal was due to “potential conflicts of interest”.

MalaysiaKini news site cited an unnamed government source as saying that Mr Arul was removed because he objected to terminating the Bandar Malaysia deal with IWH-CREC.

Mr Arul told The Star newspaper: “I have not received any official notification on this matter and I am, accordingly, unable to comment on it.”

He noted that the government, which now owns the real estate assets of Bandar Malaysia and Tun Razak Exchange through the Ministry of Finance (MOF), has the right to appoint new directors to the firm.

Opposition lawmaker Tony Pua yesterday called for the government to “come clean” over any conflicts of interest that led to Mr Arul’s dismissal. “Now that Arul Kanda has lost the confidence of the Ministry of Finance, will his role as the president and CEO of 1MDB remain tenable, and for how long?” he asked.

TMI said MOF secretary-general Mohd Irwan Serigar Abdullah will manage both development projects.

Tun Razak Exchange in the city centre is part of Prime Minister Najib Razak’s plan to create a financial hub and is under construction.

Meanwhile, Bandar Malaysia will house the terminus for the high- speed rail link with Singapore, expected to proceed as planned. The Star reported yesterday that a consortium led by government-linked firm Malaysia Resources Corporation Berhad (MRCB) continues to negotiate with Bandar Malaysia, which is wholly owned by MOF, on building the integrated transport hub.

“The agreement to build the terminal is directly between the MRCB- led consortium and MOF and not affected by the developments with regard to the rest of Bandar Malaysia,” an unnamed source told The Star.

Bandar Malaysia was part of a government plan to rationalise 1MDB’s US$11 billion (S$15.5 billion) debt, by taking over its real estate assets and developing them commercially. In the deal brokered by 1MDB, which owned TRX City before it was taken over by MOF, IWH-CREC was to take up 60 per cent ownership and jointly develop Bandar Malaysia. But TRX City terminated the deal due to the consortium’s failure to meet its payment obligations. IWH-CREC is challenging the decision.