Malaysia will reportedly pay Abu Dhabi $1.2bn before the end of this year and negotiate on a further $3.5bn
Malaysia and Abu Dhabi have reached agreement on a partial debt settlement for embattled government fund 1Malaysia Development Bhd (1MDB), the Straits Times reported, citing financial executives it didn’t identify.
Under a deal that could be signed as soon as Friday, Malaysia would pay Abu Dhabi $1.2 billion before the end of this year and negotiate on a further $3.5 billion, the Singapore-based paper said.
A proposed settlement is being handled by the 1MDB board and management, plus the prime minister’s department, Malaysia’s second finance minister, Johari Abdul Ghani, said in a text message response to questions. He didn’t elaborate. 1MDB Chief Executive Officer Arul Kanda declined to comment. Prime Minister Najib Razak’s office was not immediately available for comment.
Regulators and prosecutors in the US, Singapore and other jurisdictions have investigated banks in relation to alleged corruption and money laundering at the Malaysian government fund. 1MDB, as well as Najib, have denied any wrongdoing.
A brainchild of Najib to attract foreign investment, 1MDB accumulated billions of dollars in debt after its 2009 inception. A Malaysian parliamentary committee identified at least $4.2 billion in irregular transactions.
According to the Straits Times, the $1.2 billion settlement involves the repayment of a loan plus accumulated interest from a bailout that 1MDB received from Abu Dhabi’s International Petroleum Investment Co. in July 2015. It will largely be funded by the sale of “fund units” from 1MDB unit Brazen Sky to an undisclosed buyer, the paper said.
The countries agreed to negotiate on another dispute over roughly $3.5 billion with the aim of concluding an agreement before December 2020. During that time, neither side would pursue legal action, the paper said.
The amount to be negotiated was part of Malaysia’s obligations under a $3.5 billion bond issue that Abu Dhabi helped the Malaysian government with in 2012, according to the Straits Times.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.