1MDB gets more time to repatriate $2.5 billion

Bank Negara Malaysia said yesterday that it will give 1MDB more time to complete its rationalisation plan before requiring the indebted state fund to meet the central bank's orders to repatriate US$1.83 billion (S$2.5 billion).

"We were told that the money that was supposed to be repatriated will be used to restructure the entity and we leave it at that," said central bank governor Muhammad Ibrahim.

The governor did not provide a time frame for 1Malaysia Development Berhad (1MDB) to return the money. "We give them time so that they can restructure," said Datuk Muhammad.

On April 28, the central bank fined 1MDB an undisclosed sum over the firm's failure to comply with the directives, which included repatriating the funds and providing specific documents. 1MDB has until May 30 to pay the fines, which the firm has said will be done.

Last October, the central bank revoked three permissions that it had initially granted 1MDB from 2009 to 2011 for investments abroad, ordering the firm to repatriate the funds.

The fine against 1MDB marks the end of the central bank's investigation into the firm. However, Mr Muhammad said the central bank would extend its co-operation to other Malaysian investigative bodies probing 1MDB.

Police chief Khalid Abu Bakar said last month the police had resumed their probe into the fund after the release of the parliamentary Public Accounts Committee's report.

The scandal surrounding 1MDB has raised concerns over Malaysia's sovereign ratings, but Mr Muhammad said the country's sovereign rating "would not be largely affected" and that the "ringgit has priced in the issue of 1MDB".

The governor said the institution would not interfere in the dispute between 1MDB and Abu Dhabi's state- owned International Petroleum Investment Company (IPIC).

IPIC said 1MDB has not repaid US$1 billion for a loan, an accusation denied by 1MDB, which said it made the payments to IPIC's subsidiary registered in the British Virgin Islands.

This article was first published on May 14, 2016.
Get a copy of The Straits Times or go to straitstimes.com for more stories.