PUTRAJAYA has removed Arul Kanda Kandasamy from the Bandar Malaysia and Tun Razak Exchange company boards, citing “potential conflicts of interest” in the fallout from the aborted Bandar Malaysia deal with the IWH-CREC consortium.

However, he remains president of 1Malaysia Development Bhd (1MDB), the scandal-hit state investor taken over by the Ministry of Finance (MoF) last year. Arul Kanda was Bandar Malaysia Sdn Bhd board chairman and TRX City board member.

Sources told The Malaysian insight that the decision was made by Finance Minister Najib Razak and Treasury secretary-general Irwan Serigar Abdullah, who also heads the 1MDB board of directors.

“There are potential conflicts of interest,” a source told The Malaysian Insight.

The MoF is the sole shareholder of 1MDB, after its real estate assets of Bandar Malaysia and TRX were transferred to TRX City Sdn Bhd.

The MoF terminated a 2015 share sale agreement between TRX City and IWC-CREC Sdn Bhd on May 3, saying the deal had lapsed as the joint venture had not fully completed the RM7.41 billion purchase of 60% equity after 12 extensions.

IWC-CREC has disputed the MoF version of events and said it reserved all rights with respect to the matter.

The MoF looks unlikely to capitulate to IWH-CREC, whose refusal to back down may have surprised the project owner, because it hopes to clear 1MDB’s debt before the next general election.

Minister in the Prime Minister’s Office Abdul Rahman Dahlan has said that the Bandar Malaysia project will go ahead with a new master developer whose plans are “far more attractive and comprehensive”.

The replacement is widely speculated to be the Dalian Wanda group teaming up with local partner, the Malton group.

IWH-CREC, a Sino-Malaysian consortium, had agreed in December 2015 to take a 60% stake in Bandar Malaysia, a major residential and commercial real-estate project in Kuala Lumpur, which was originally to be developed by 1MDB.

The RM7.41 billion deal was a cornerstone of efforts by Putrajaya to sell off 1MDB assets after the fund ran up more than US$13 billion (RM56.38 billion) in debt. 

Arul Kanda, who was made 1MDB chief executive in January 2015, had promised to resolve the state investor’s debts by the end of that year. He was previously executive vice-president and investment banking head at Abu Dhabi Commercial Bank, which he joined in July 2008. – May 8, 2017.