Malaysia reaches $1.7b deal with Abu Dhabi over 1MDB debt

PHOTO: Reuters

KUALA LUMPUR - Malaysia has reached agreement to pay Abu Dhabi about US$1.2 billion (S$1.7 billion) to settle debts incurred by its controversial state investment fund 1MDB, it was announced Monday.

Half will be paid to the emirate's sovereign wealth fund International Petroleum Investment Co by end-July and the rest by the end of the year, according to an IPIC statement to the London Stock Exchange.

1MDB (1Malaysia Development Berhad) will also assume responsibility for the coupon and principal obligation on bonds worth $3.5 billion which it issued and which were guaranteed by IPIC, the statement said.

"These obligations will be met by 1MDB, primarily via monetisation of 1MDB-owned investment fund units," the Malaysian fund said in a separate statement quoted by Bloomberg News.

Ex-Falcon Bank manager charged in 1MDB probe

  • Singapore prosecutors on Thursday filed 16 charges against Jens Sturzenegger, the local branch manager of Swiss-based Falcon Private Bank AG, as part of an ongoing investigation into 1MDB.
  • Sturzenegger is the fifth person but the first foreigner charged in Singapore amid global-wide probes into money-laundering and corruption at the Malaysian fund.
  • Prosecutors filed 10 charges of giving false information, five charges of failing to disclose suspicious information and one charge of failing to submit suspicious transactions against Sturzenegger.
  • In one of the charges, Sturzenegger was accused of conniving in Falcon's failure to submit reports on suspicious transactions relating to inflows of US$1.265 billion (S$1.82 billion) into two Falcon bank accounts between March 21 and 25, 2013.
  • The Swiss national who was arrested in October, intends to plead guilty, though it was not immediately clear on which charges he would plead guilty. A hearing is set for Jan 11.
  • 1MDB is currently the subject of money laundering investigations in at least six countries, including Switzerland, Singapore and the United States.
  • It was founded by Malaysian Prime Minister Najib Razak, who chaired its advisory board.
  • Najib has denied any wrongdoing and said Malaysia will co-operate with the international investigations.
  • Falcon was ordered to shut down last October for "serious failures in anti-money laundering controls and improper conduct by senior management". It became the second bank to be closed down by MAS over 1MDB connections, after BSI.
  • On Dec 22, 2016, ex-BSI banker Yeo Jiawei was sentenced to a 30-month jail term, the longest yet handed down by a Singapore court in 1MDB-related cases.
  • He was the third former BSI banker to be found guilty in the city's 1MDB investigations. Yak Yew Chee was sentenced in November to an 18-week jail term and fined for forging documents and failing to disclose suspicious transactions.
  • Yak's subordinate, Yvonne Seah Yew Foong, was jailed for two weeks and fined on Dec 16 for similar offenses.

"This arbitration settlement and monetisation of investment fund units represents the resolution of a significant challenge, and is a major part of the 1MDB rationalisation plan, which is now at its final stages of conclusion." 1MDB and the Abu Dhabi fund had been involved in a dispute that extended to repayments on two sets of bonds issued by the Malaysian fund.

Read also: Najib's step-daughter speaks out against family for 1MDB crisis

In April 2016 1MDB defaulted on US$1.75 billion in bonds after missing an interest payment of US$50 million.

In June that year Abu Dhabi announced it was seeking US$6.5 billion from the Malaysian fund through international arbitration.

1MDB and its founder Malaysian Prime Minister Najib Razak are battling allegations that billions were looted from the fund in complex overseas deals that are being investigated by authorities in several countries.

In April 2016 a Malaysian parliamentary committee said at least $4.2 billion in questionable overseas money transfers were made by 1MDB.

Both the fund and Najib have vehemently denied wrongdoing.

The case that rocked Malaysia: 1MDB

  • Every time 1MDB borrowed money, large amounts of the cash were quickly misappropriated, according to investigators. The money followed a circuitous path, and roughly US$1 billion landed in the private bank accounts of Malaysian Prime Minister Najib Razak.
  • Transaction 1: The Saudi Arabian oil venture money

    1MDB borrowed about US$1.8 billion for a joint venture with Saudi oil company PetroSaudi International. About US$1 billion of the cash went to a Seychelles company called Good Star Ltd. A co-founder of PetroSaudi, Prince Turki bin Abdullah, received US$24.5 million from Good Star before transferring US$20 million to Mr Najib via an intermediary.

  • Transaction 2: The power plant money

    Two bonds worth a total of US$3.5 billion were sold for 1MDB by Goldman Sachs to fund the purchase of power plants. 1MDB was supposed to pay money for a guarantee on the bonds to a unit of Abu Dhabi's IPIC called Aabar Investments PJS. Instead, the funds went to the similarly named Aabar Investments PJS Ltd.

  • Transaction 2: The power plant money

    From Aabar BVI, about US$637 million went to a company called Blackstone Asia Real Estate Partners. Another US$463 million went from Aabar BVI to two mutual funds in the Caribbean island of Curaçao and then onto Blackstone Asia Real Estate Partners, which transferred a total of $170 million to Mr. Najib’s bank accounts.

  • Transaction 4: The Abu Dhabi real estate money

    Of the US$1.05 billion Mr. Najib received in his accounts, only US$80 million appears to clearly originate with Saudi Arabia. Another US$120 million came via an intermediary based in Saudi Arabia. At least US$20 million of that US$120 million has been traced clearly back to 1MDB by investigators. The remaining US$850 million came via Tanore Finance and Blackstone Asia.

  • Transaction 4: The four paths

    1MDB sold US$3 billion in bonds via Goldman Sachs to fund a real-estate joint venture with Abu Dhabi. 1MDB transferred US$1.27 billion ended up in a British Virgin Islands company called Tanore Finance Corp, which then transferred US$680 million to Mr. Najib’s accounts.

  • On July 20, 2016, US Attorney General Loretta E. Lynch announced the filing of civil forfeiture complaints seeking the forfeiture and recovery of more than US$1 billion in assets associated with an international conspiracy to launder funds misappropriated from a Malaysian sovereign wealth fund 1MDB.
  • Riza Aziz, stepson of PM Najib; Low Taek Jho, and Khadem Al Qubaisi, former Abu Dhabi managing director of sovereign wealth fund have been named in US Justice Department's lawsuits involving seizures of assets allegedly acquired with stolen 1MDB funds.
  • Riza Aziz, co-founder of Red Granite Pictures, was accused in US lawsuits of using US$100 million dollars that was diverted from Malaysian state development fund 1MDB in a money-laundering scheme, to finance the film.
  • US Department of Justice said Abu Dhabi tycoon Khadem al-Qubaisi, who helmed IPIC, used 1MDB funds to buy a New York penthouse and Beverly Hills properties.
  • UAE central bank reportedly told banks to freeze the assets of Khadem al-Qubaisi and Mohammed Ahmed Badawy Al-Husseiny (photo), the former chief executive of Aabar Investments PJS and provide information about their deposits and transactions.
  • Producer Riza Aziz (Lt) and cast members like Leonardo DiCaprio (next to him), at the UK premiere of ‘The Wolf of Wall Street’ in London. The movie was allegedly produced using stolen 1MDB funds.
  • A Beverly Hills home was bought by a shell company allegedly tied to Low Taek Jho.
  • Produced by Riza Aziz's Red Granite Pictures, The Wolf of Wall Street is expected to make another US100 million, according to industry analysts in the wake of the US lawsuits to seize assets acquired allegedly with stolen 1MDB funds.
  • Dumb And Dumber To was produced by Riza Aziz's Red Granite Pictures. US Department of Justice has named him in its lawsuits to seize assets acquired allegedly with stolen 1MDB funds.
  • Another movie produced by Riza Aziz's Red Granite Pictures is Daddy's Home.
  • Swiss authorities have seized artworks acquired allegedly with stolen 1MDB funds. They include Vincent Van Gogh's sketch La Maison de Vincent a Arles and Claude Monet's Nympheas avec Reflets de Haute Herbe (photo), which is worth US$57.5 million.
  • Swiss authorities seized Vincent Van Gogh's sketch La Maison de Vincent a Arles, which is worth US$5.5 million.
  • Also seized by Swiss authorities was Claude Monet's Sainte-Georges Majeur, which has an estimated worth of US$35 million.
  • PM Najib Razak and his wife Rosmah Mansoor in a minor pilgrimage at Mecca in March 2016. Najib has repeatedly denied wrongdoing over 1MDB allegations. US Department of Justice did not name him in its lawsuits but mentioned the involvement of a "Malaysian Official 1'.
  • Dr Mahathir Mohamad (R), former Malaysia Prime Minister, called for PM Najib to step down after the US disclosure.
  • A photo of a Park Laurel apartment in New York city. US Department of Justice said among the properties allegedly bought with stolen 1MDB funds is a US$33.5 million condominium at the Park Laurel. The purchase was made by a shell company allegedly controlled by Mr Riza Aziz, the step-son of PM Najib.
  • TwentyOne Angullia Park in Orchard Boulevard, where Mr Low Taek Jho owns a penthouse bought for $42.91 million in 2013, and another unit bought for $11.53 million. Singapore authorities have prohibited any dealing in the units since February 2016.
  • In March, the Wall Street Journal reported that deposits into personal accounts of Malaysia's prime minister totaled more than US$1 billion (S$1.4 billion) - hundreds of millions more than previously identified.
  • Tim Leissner, a Goldman Sachs partner who handled deals for 1MDB was suspended and later quit after bank investigators found he allegedly violated firm policies.
  • On Feb 5, private banker Yak Yew Chee withdrew his request to release money in his bank accounts, which had been frozen by Singapore authorities as part of their probe into 1MDB.
  • Yak Yew Chee, a senior private banker with Swiss bank BSI, was the first name to emerge from the Singapore probe into 1MDB, after it was reported that he was seeking access to his bank accounts which were frozen as part of the investigations.
  • In January, Malaysia's attorney-general said on in January that US$681 million (S$974 million) transferred into Prime Minister Najib Razak's personal bank account was a gift from the royal family in Saudi Arabia.
  • It was later reported that the payment was personally authorised to Prime Minister Najib Razak by Saudi Arabia's late King Abdullah.
  • Malaysians, eager to see if bank details that were published in the report were Madam Rosmah's, have been transferring RM1 (36 Singapore cents) to her account, liberal news portal Malaysian Insider reported.
  • Nine documents detailing how almost US$700mil (S$943mil) in 1MDB funds allegedly ended up in Prime Minister Datuk Seri Najib Tun Razak's (pic) personal bank accounts have been released by the Wall Street Journal (WSJ).
  • The documents showed alleged bank transfers from various companies to Najib's personal accounts on March 2013, December 2014 and February 2015.
  • However, some details such as the last five digits of the AmIslamic Bank Bhd account, said to belong to Najib, were redacted.
  • The development fund, which owns a large portfolio of power plants, has missed payments on the bridge loan that was due end-December and its lenders were keen to see it paid before they had to write it down in first-quarter earnings, bankers said.
  • Local media have reported that the final deadline was Feb 18.
  • Malaysia's indebted and controversy-ridden state investor 1MDB will be left as a skeletal structure and possibly dissolved under a debt repayment plan in which most of its assets will be sold, sources with direct knowledge of the matter said.
  • 1MDB, a property-to-energy fund whose advisory board is chaired by Prime Minister Najib Razak, has built debt of nearly 42 billion ringgit ($11.73 billion) to build a portfolio of power plants
  • Malaysian billionaire Krishnan is preparing to settle a $550 million loan owed by troubled state fund 1MDB, four sources familiar with the matter said - a last-minute reprieve for the fund whose debt woes are pressuring the ringgit and the country's sovereign credit rating.
  • Arul Kanda, newly appointed president and group executive director of Malaysia's state investor 1Malaysia Development Bhd (1MDB)
  • In his first week on the job, Kanda, the new head of loss-making Malaysian state investor 1MDB has had a ringside view of his future challenges.
  • A missed loan payment that spooked bond and currency markets...
  • And a possible delay in an ambitious asset sale he must pull off to cut a debt pile of nearly $12 billion.
  • Regarded as a cross between a sovereign wealth fund and a private investment vehicle, with Prime Minister Najib Razak chairing its advisory board, 1MDB is struggling under the burden of $11 billion in borrowed money.

 

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