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Kuala Lumpur: A financial fraud investigator told the High Court here today 1MDB’s purported investment in a Cayman Island hedge fund only showed a

profit on paper

which was never realised.

Richard Templeman, an investigation director at risk and financial advisory firm Kroll Advisory Ltd, said a purported fund restructuring exercise conducted in 2012 gave the impression that 1MDB had turned a profit of between US$400 million to US$500 million.

He said 1MDB also purportedly became owners of shares in Brazen Sky Ltd through a US$2.3 billion investment which was then invested in Bridge Global Partners.

"The true value is almost nothing. It was only profit on paper,"Templeman said.

He was testifying at the trial of 1MDB’s lawsuit against former CEO Arul Kanda Kandasamy and former Treasury secretary-general Irwan Serigar Abdullah for breach of trust and conspiracy.

Templeman also claimed both Arul Kanda and Irwan would have known that 1MDB funds had been "recycled" if they had reviewed transactions involving Brazen Sky.

Cross-examined by lawyer Lavania Kumaraendran, representing Irwan, he said he was aware that Malaysia and several other countries were investigating 1MDB’s affairs since 2015.

However, he said, he did not read a report issued by the Public Accounts Committee on 1MDB which had pinned blame for the company’s losses on former CEO Shahrol Azral Ibrahim Halmi.

Lavania: Your duty was only (to investigate) the money trail and so you are not in the position to comment on the allegations (of breach of trust and conspiracy) against Irwan?

Templeman: I disagree.

1MDB filed the suit against the duo for breach of trust and conspiracy in May 2021.

The company claims they had caused it to suffer losses of US$1.83 billion in relation to its investment in 1MDB-Petrosaudi Ltd, which was converted into an investment into Brazen Sky Limited and then found in the Bridge Global Fund.

1MDB also claimed that Arul Kanda and Irwan misappropriated US$3.5 billion in 1MDB money paid to Aabar Investments, and US$1.265 billion paid to International Petroleum Investment Company (IPIC) on May 9, 2017.

It alleged that Irwan also conspired with Arul Kanda to cause the company to implement an employment extension agreement, and made a substantial payment of RM2,905,200 to Arul Kanda in accordance with the agreement, in disregard of the company’s interests, causing it to suffer loss and damage.

The company demanded that the two defendants pay US$6.59 billion in damages, and for Irwan to reimburse the company for the payment made under the employment extension agreement.

The hearing before judicial commissioner Raja Ahmad Mohzanuddin Shah Raja Mohzan continues on Sept 17, with former Damansara MP Tony Pua scheduled to testify.