KUALA LUMPUR – Malaysia’s state fund 1Malaysia Development Berhad (1MDB) has paid US$350 million (S$477 million) to Abu Dhabi’s International Petroleum Investment Co (IPIC), the first tranche of a debt repayment scheme.
The payment was made ahead of the deadline on Saturday (Aug 12) and was more than the US$310 million it was required to pay under the scheme.
“1MDB has now remitted, to date, the equivalent of US$360 million to IPIC,” the state fund said in a statement on Thursday. “All funds paid to IPIC are from proceeds of the on-going rationalisation programme.”
This comes as the US intensifies a criminal investigation into money allegedly diverted from the state fund into luxury real estate, art and film productions. Bloomberg reported that court filings by the Justice Department on Thursday (Aug 10) showed the US was escalating its probe in a global effort to uncover the amount of 1MDB funds that was allegedly misappropriated.
The department had asked a judge in Los Angeles to put on hold civil forfeiture lawsuits against assets acquired by Malaysian financier Low Taek Jho, also known as Jho Low, and others involved with 1MDB as pursuing these cases may hamper the criminal investigation, reported Bloomberg.
The debt-laden state fund missed a July 31 deadline and a five-day extension to repay IPIC and was given an extra week until Saturday to pay US$310 million.
“The balance of the original 31 July 2017 payment obligation to IPIC is accordingly now due on 31 August 2017,” 1MDB said in its statement.
The Malaysian Insight understands that the money was wired from 1MDB’s account in Malayan Banking Berhad (MBB), Malaysia’s largest banking group.
The sum owing is the first of two payments amounting to US$1.2 billion due to IPIC before the end of the year, according to the terms of the private arbitration in April in London.
Under the deal, 1MDB and the Finance Ministry also assumed responsibility for all future interest and principal payments under two bonds, worth US$3.5 billion in total, according to Malaysian Insight.
Missed payments by 1MDB are a concern for foreign investors, who own a significant share of government bonds in the South-east Asian nation. Allegations of fraud involving 1MDB have already spooked investors by weighing on Malaysia’s currency.
1MDB was started by Prime Minister Najib Razak in 2009 soon after he became Malaysia’s leader. He has been battling allegations that money from the fund had been stolen by him and his associates.
Last year, Mr Najib was cleared of any wrongdoing in the 1MDB scandal by Malaysia’s Attorney-General.
The Malaysian leader admitted there were “lapses in governance” in the state fund, but maintained that government investigations found no wrongdoing, and that 1MDB is undergoing rationalisation to rid itself of its heavy debts.
Besides the US, Switzerland, Singapore and Luxembourg are also investigating whether banks and individuals had a role to play in allegedly embezzling and money-laundering some US$6 billion (S$8.1 billion) that 1MDB raised for development projects.
The US Justice Department had earlier filed suits to seize more than US$1 billion in assets allegedly purchased using misappropriated funds from 1MDB.
The Singapore probe has resulted in an investment banker, Yeo Jiawei, being sentenced to four-and-a-half years in jail for money laundering.
Singapore prosecutors involved in the case had said in court that Jho Low, whom Yeo supposedly called “boss”, had victimised 1MDB and received large sums of money traceable to the fund for his own benefit.
Jho Low has denied accusations of wrongdoing.
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