Abu Dhabi’s IPIC and subsidiary Aabar Investments filed claim against Malaysian state fund in June
Malaysia’s state investment fund 1MDB is seeking Chinese assistance to repay $6.5 billion to Abu Dhabi's International Petroleum Investment Company (IPIC) over an alleged breach of contract, according to a report.
The move to repay was confirmed by two people familiar with the matter, the Financial Times said on Wednesday.
IPIC and its subsidiary Aabar Investment said in June it had filed a $6.5bn request for arbitration against 1MDB, in an announcement to the London Stock Exchange.
The claim was the latest in the ongoing stand-off between two state firms. IPIC has business links to scandal-hit 1MDB, which is at the centre of corruption and money-laundering investigations across multiple jurisdictions.
The FT, citing three people with knowledge of the matter, reported that China has been approached as a source of funds for the heavily-indebted 1MDB. One of the sources said Malaysia would be swapping assets for financing.
Chinese state-owned enterprises have already led a bailout of 1MDB, including acquiring assets such as a power generation business, the newspaper said, alleviating some pressure on the Malaysian government while the investigations are underway.
Meanwhile, The Straits Times reported in July this year that Chinese companies were looking at buying a piece of prime land on Penang island for about RM2 billion, or entering into a joint development deal with 1MDB that would guarantee profits of about RM3.5 billion.
“1MDB has nothing further to add to earlier statements relating to the dispute with IPIC, 1MDB president Arul Kanda told The Straits Times.
In their formal request for arbitration in June, IPIC and Aabar said the alleged “failure of 1MDB and [Malaysia’s] Ministry of Finance to perform their obligations, cure their defaults or put forward acceptable proposals has left IPIC in the position where it must pursue its claims in arbitration”.
Arabian Business has approached IPIC and 1MDB for a comment.