KUALA LUMPUR (Reuters) – Malaysia will negotiate a settlement agreement between scandal-plagued sovereign wealth fund 1MDB and the Abu Dhabi sovereign wealth fund IPIC, which was negotiated during the reign of former leader Najib Razak.
Men walk past a 1Malaysia Development Berhad (1MDB) billboard at the flagship advance development of the Tun Razak Exchange in Kuala Lumpur March 1, 2015. REUTERS / Olivia Harris / File Photo
International Petroleum Investment Co, known as IPIC, and 1MDB had reached an agreement last year in a dispute over 1MDB bonds guaranteed by IPIC.
The Malaysian fund had agreed to pay IPIC $ 1.2 billion and took responsibility for future capital and interest payments on the bonds.
Najib was then Prime Minister, but lost an election to Mahathir Mohamad earlier this year and has since been charged with corruption in 1MDB-related probes. He pleaded not guilty and consistently denied any wrongdoing.
"The basis for Malaysia's suit before the High Court in London is that the consent was obtained by fraud or in a manner contrary to public order," said Attorney General Tommy Thomas in a statement.
He said that Malaysia was required to pay IPIC and the trustee of the bond over five years below the 2017 price of $ 5.78 billion, but now he will seek future commitments and try to recover the $ 1.46 billion already paid ,
"Fraud is a well-established basis for challenging the approval decision on grounds of public policy," Thomas said, adding that the petition for contesting the agreement will be tabled on Tuesday.
The Abu Dhabi state-owned Mubadala fund, which merged with IPIC last year, said it had no legal action calling into question the outcome of the arbitration.
"There remains a legally binding settlement agreement agreed by the arbitration boards," Mubadala said in an e-mail message to Reuters.
It said that 1MDB currently owes no liabilities to IPIC or Mubadala.
"The 1MDB Group issued US $ 3.5 billion in debt to various bondholders for which IPIC has provided guarantees to these bond creditors." As an issuer, the primary purpose of the 1MDB Group is to pay regular coupons to bondholders and to pay interest Repay principal at maturity, "it said.
1MDB is the subject of money laundering and corruption investigations in at least six countries, including Malaysia and the United States.
Last week, Najib was beaten by prosecutors with four allegations of corruption over the settlement agreement with IPIC.
Reporting by A. Ananthalakshmi and Stanley Carvalho; Cut by Nick Macfie and Kim Coghill