1MDB CEO remains silent about his removal from Bandar Malaysia, TRX City board

Arul, when contacted by International Business Times, said: "I have nothing further to add to the statements made yesterday."

Picture for representation
Traffic passes a 1Malaysia Development Berhad (1MDB) billboard at the Tun Razak Exchange development in Kuala Lumpur Reuters

1Malaysia Development Berhad (1MDB) president and chief executive officer, Arul Kanda Kandasamy, refuses to comment on reports of his removal from the board of Bandar Malaysia Sdn Bhd and TRX City Sdn Bhd yesterday. He told StarBiz that he had not received official notification on the matter.

Arul, who was appointed as the CEO of 1MDB in January 2015, when contacted by International Business Times said: "I have nothing further to add to the statements made yesterday."

Speculations of his dismissal emerged when a news portal cited sources claiming the removal could be due to a "potential conflict of interest" in view of the lapsed Bandar Malaysia deal, which is a joint venture between China's China Railway Engineering Corp (CREC) and Malaysia's Iskandar Waterfront Holdings Sdn Bhd (IWH).

Free Malaysia Today quoted Arul saying that his appointment as a board member of TRX City and Bandar Malaysia was because 1MDB was the shareholder of both firms. With both companies being transferred to the Finance Ministry (MoF), which came into effect on 31 March 2017, he said it was expected that the ministry would seek to appoint a new set of directors.

On May 3, TRX City in a statement said the share sale agreement (SSA) with IWH and CREC of the sale of 60% of the issued and paid-up capital of Bandar Malaysia had lapsed due to the failure of purchasing parties fulfilling payment obligations.

The company added that despite repeated extensions granted, the consortium of IWH and CREC failed to meet the payment obligations, which was a prerequisite condition written under the SSA signed on 31 December 2015.

IWH-CREC responded in a statement saying it took the termination of the agreement seriously and was reviewing the content of the notice. The claim made by TRX City on IWH-CRECs' failure to make payment was rebuked. Moreover, the consortium said that given the factual matrix, it did not fully reflect the circumstances and conduct of parties in the matter.

On Tuesday, Singapore Straits Times reported that the Dalian Wanda Group would be in the run for the development of Bandar Malaysia.

The daily said that government officials and executives familiar with the matter are holding discussions, which hints that they want Dalian Wanda to take over the central role as the master developer.

It was reported that the agreement is pending its approval from the China financial regulators, which had imposed stricter capital control to discourage large outflow of capital from the country.