Malaysia to challenge settlement between 1MDB, IPIC, claiming fraud
MALAYSIA will challenge a settlement between an Abu Dhabi sovereign fund and scandal-ridden state fund 1Malaysia Development Berhad last year under the previous government led by former Prime Minister Najib Abdul Razak, Attorney General Tommy Thomas said Tuesday.
Thomas said in a statement that Najib “defrauded” the state fund, which he was in charge of, and did not act in the interest of the nation when he consented to the settlement agreement at the London-based Court of International Arbitration.
Under the agreement reached in April last year, 1MDB is to pay International Petroleum Investment Company US$5.78 billion (K9.29 trillion). So far $1.46 billion has been paid.
Najib founded and oversaw 1MDB in his role as finance minister.
“Every system of law would hold that he could not possibly have acted in the best interests of his country and his company. Indeed, he did not. Fraud is an established ground to challenge the consent award for public policy reasons,” Thomas said.
It was thought that 1MDB had agreed to the settlement to avoid potentially embarrassing proceedings that London-listed IPIC and its unit, Aabar Investments PJS, initiated in June 2016 with the arbitration court for a total claim of $6.5 billion.
The Abu Dhabi fund had lent to and co-guaranteed billions of dollars of 1MDB debt since 2012 for the acquisition of two power companies.
The arbitration process came in the midst of the stunning revelation by the US Department of Justice in July 2016 that nearly $700 million was transferred from 1MDB to Najib’s personal bank account.
The United States is among a host of countries investigating 1MDB for fraud and money laundering.
The Justice Department had estimated some $4.5 billion was misappropriated by close associates of Najib, including his stepson, to buy luxury properties, paintings and jewellery.
Najib admitted receiving the $700 million in 2013 but claimed it came from the Saudi royal family and not 1MDB. He said the money was meant for his political party to be spent for the election that year and that he had returned most of it.
Najib was ousted from office in the May general election. Since losing power he has been slapped with 38 corruption and money laundering charges, including one for breach of trust over the payment to IPIC.
Thomas said Malaysia’s legal challenge at the High Court of London takes into account the fact that IPIC and Aabar knew of the Justice Department’s allegations against Najib.
“Malaysia will claim that as a result of the fraud, we are relieved from any obligation to pay the balance of $4.32 billion to IPIC or Aabar under the consent award and additionally have a right to recover the $1.46 billion already paid,” he added.
Malaysian Attorney General Tommy Thomas.