KUALA LUMPUR: Two former 1MDB directors have urged the High Court to dismiss former chairman Irwan Serigar Abdullah’s application to make them share liability in 1MDB’s US$6.59 billion (RM28.56 billion) civil suit, saying it is legally flawed.
Lawyer Razlan Hadri Zulkifli, appearing for Kamal Ali and Norazman Ayob, submitted that Irwan’s third-party proceedings could not succeed because they were based on the law of contribution between joint tortfeasors, whereas 1MDB’s lawsuit was not based on any tort.
He said a defendant seeking contribution from third parties must first establish that the plaintiff suffered a tortious wrong at the hands of the defendant.
“In this case, 1MDB is not alleging that Irwan breached any tortious duty or committed a tort against the company,” Razlan said in his submission.
The lawyer said the causes of action were based on alleged breaches of fiduciary duties and breaches of the Companies Act.
“Since there is no tort, there can be no successful third-party proceedings for contribution,” said Razlan, who was assisted by Edmund Choi and Yiow Ern Syenn.
Razlan also argued that even if the court were to find the commission of a tort, Kamal and Norazman could not be regarded as joint tortfeasors with Irwan.
He said liability as joint tortfeasors required a common design or concerted action to commit the alleged wrongdoing.
“Although they sat on the same board and participated in decisions now challenged by 1MDB, directors are required by law to exercise independent judgment. They did not act pursuant to a common design,” he said.
As an alternative argument, Razlan submitted that even if the court found his clients liable, it had the discretion under Section 10(2) of the Civil Law Act and Section 581 of the Companies Act to exempt them from liability if it was just and equitable to do so.
He said Norazman was merely a senior civil servant while Kamal served as a director of several companies linked to the finance ministry.
“In contrast, Irwan served as the secretary-general (of the Treasury at the ministry) for several years. I am asking the court to exempt my clients from liability, even if they are found liable,” he said.
Razlan also drew comparisons with former 1MDB chief financial officer Azmi Tahir, saying Azmi could arguably be considered a tortfeasor because of his role in matters relating to the Brazen Sky fund units and payments made to the disputed Aabar Investments PJS entity.
Irwan has brought Kamal, Norazman and Azmi into 1MDB’s civil suit as third parties, arguing that they should share liability if the company succeeds in proving it suffered billions of ringgit in losses.
He contends that the three were involved in decisions and transactions now challenged by 1MDB, including the Brazen Sky investments, the US$3.5 billion payments to Aabar Investments PJS, the US$1.265 billion settlement with International Petroleum Investment Company, and the extension of ex-CEO Arul Kanda Kandasamy’s employment contract.
1MDB alleges that Irwan and Arul Kanda breached their duties in relation to those transactions and is seeking US$6.59 billion in damages, together with RM2.9 million linked to Arul Kanda’s employment agreement.
The hearing before Justice Raja Ahmad Mohzanuddin Shah Raja Mohzan has been adjourned to Sept 1.
