1MDB Scandal: Talks Between Malaysia, Abu Dhabi Over Missing Money Break Down

1MDB Scandal: Talks Between Malaysia, Abu Dhabi Over Missing Money Break Down

Negotiations between government investment funds in Malaysia and Abu Dhabi over who is responsible for billions of dollars in missing money have broken down, according to people familiar with the matter, making it harder for the two funds to put the scandal behind them.

Abu Dhabi sovereign-wealth fund International Petroleum Investment Co. has said 1Malaysia Development Bhd. owes it about $6.5 billion after Malaysia defaulted on bonds guaranteed by IPIC and refused to pay back an emergency loan IPIC gave 1MDB in July 2015.

The U.S. Justice Department said last summer that some $3.5 billion was siphoned from 1MDB and used to fund purchases of real estate and other assets by associates of Malaysian Prime Minister Najib Razak and others. Mr. Najib and 1MDB have repeatedly denied wrongdoing and pledged to cooperate with any lawful investigations.

The 1MDB fund, set up in 2009 by Mr. Najib to boost Malaysia’s economy, is the subject of investigations in six countries. The Justice Department filed a series of asset seizure suits last summer against more than $1 billion worth of luxury real estate in the U.S. and U.K., artwork and other assets.

Abu Dhabi and Malaysia nearly reached a deal in December in which Malaysia’s government would immediately pay $1.2 billion as a first step to resolving the overall dispute, but Malaysia pulled out because advisers to the prime minister were dissatisfied with the agreement, according to the people familiar with the matter. Abu Dhabi expects to take the dispute, which has damaged the once close relationship between the countries, to arbitration, the people said.

Malaysia’s government and 1MDB declined to comment on the negotiations. A senior Abu Dhabi government official said the emirate had negotiated in good faith after a request from Malaysia to resolve the dispute by the end of 2016, but “that good faith dissipated when the new year began and there had been no material progress on any repayment.”

The disintegrating relationship between the two parties complicates efforts by Malaysia to wind down 1MDB and move on from the scandal, which investigators in three countries have called one of the world’s biggest-ever alleged frauds.

Credit raters say the Malaysian government can afford to cover any outstanding debts from 1MDB. But doing so could produce unexpected economic strains and pressure the Malaysian ringgit currency, among other risks, said Julian Wee, a markets strategist at National Australia Bank in Singapore.

Although 1MDB’s U.S. dollar bonds have been trading relatively steadily in the past few months and even rallied at the start of 2017, the ringgit has weakened 5.5% since the U.S. election. The International Monetary Fund ranks Malaysia’s foreign currency reserve adequacy among the weakest in emerging markets.

The dispute also keeps a spotlight on the role of Goldman Sachs Group Inc., which was deeply involved with 1MDB’s fundraising, including the bonds guaranteed by IPIC. U.S. Justice Department investigators are trying to determine whether Goldman had reason to suspect that money it helped 1MDB raise was misused. Goldman has consistently said it did nothing wrong and had no way of knowing whether there might be fraud surrounding 1MDB.

At the heart of the Malaysia-Abu Dhabi dispute is a series of agreements in which the oil-rich emirate agreed to support 1MDB, including by guaranteeing some of its debt so that it would be easier for 1MDB to raise funds from global investors. 1MDB said it sent Abu Dhabi $3.5 billion as payments and collateral for those guarantees. But Abu Dhabi says it never received the money.

The Wall Street Journal reported last year that the funds instead went to a company in the British Virgin Islands set up to appear like a subsidiary of IPIC, before being distributed among several beneficiaries, including associates of Mr. Najib. The Journal also reported that hundreds of millions of dollars were deposited into Mr. Najib’s own bank accounts.

1MDB Scandal: Talks Between Malaysia, Abu Dhabi Over Missing Money Break Down
Jan. 20, 2017 – WSJ


0 Responses to “1MDB Scandal: Talks Between Malaysia, Abu Dhabi Over Missing Money Break Down”

  1. Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

What happened to 1MDB’s money? – CNBC Video
Nuclear lessons for Malaysia (Part 1) (Part 2)
BN govt is directing attention to distant past and distant future, in order to distract people from present misdeeds and poor governance
Felda - A picture is worth a thousand words
How the 1MDB Scandal Spread Across the World (WSJ)
We cannot afford ridiculously expensive RM55 Billion ECRL!
All that is necessary
for the triumph of evil
is for good men
to do nothing.

- Edmund Burke
When the people
fears their government,
there is TYRANNY;
when the government
fears the people,
there is LIBERTY.

- Thomas Jefferson
Do you hear the people sing?



%d bloggers like this: