Malaysia to settle with Abu Dhabi in 1MDB case

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The governments of Malaysia and Abu Dhabi reportedly reached an agreement on a partial debt settlement in the case involving scandal-ridden fund 1Malaysia Development Berhad, or 1MDB, according to The Straits Times, which referred to information it obtained from senior financial executives familiar with ongoing negotiations.

Under a deal that could be signed as soon as April 21, Malaysia would pay Abu Dhabi $1.2 billion before the end of this year and negotiate on a further $3.5 billion in outstanding debt.

The first payment would be largely funded by the sale of assets held by Brazen Sky Ltd., a fund investment unit of 1MDB, which holds units in a Cayman Islands-registered fund worth around $940 million, to an undisclosed buyer. This settlement involves the repayment of a loan plus accumulated interest from a bailout that 1MDB received from Abu Dhabi’s state-owned International Petroleum Investment Co., or IPIC, in July 2015.

The units were previously managed by BSI Bank Singapore which had their banking license suspended by the Money Authority of Singapore in 2016, and were since with an unnamed custodian bank.

The two countries also 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 newspaper said. The loans from IPIC came under a $3.5 billion bond issue that Abu Dhabi helped Malaysia raise in 2012.

While 1MDB did not comment on the report, Malaysia’s second finance minister, Johari Abdul Ghani, told Bloomberg that “a proposed settlement is being handled by the 1MDB board and management, plus the prime minister’s department.”

Observers note that the settlement would significantly reduce the impact of any legal action taken by foreign governments over alleged money laundering at 1MDB by its representatives, including Malaysia’s Prime Minister Najib Razak.

This is because the disputed loans in the Malaysia-Abu Dhabi dispute are central to legal suits brought by the US Department of Justice over the alleged misappropriation of over $3.5 billion from 1MDB. The US claims that the funds siphoned from 1MDB were used to fund purchases of real estate and other assets by associates of Najib.

But a settlement would widely remove the basis for a US action against a serious offense involving the provision of funds for money laundering because of the lack of evidence, and also diminish the international legal challenges for Najib and his administration over the fallout from the 1MDB scandal.

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Reading Time: 2 minutes

The governments of Malaysia and Abu Dhabi reportedly reached an agreement on a partial debt settlement in the case involving scandal-ridden fund 1Malaysia Development Berhad, or 1MDB, according to The Straits Times, which referred to information it obtained from senior financial executives familiar with ongoing negotiations.

Reading Time: 2 minutes

The governments of Malaysia and Abu Dhabi reportedly reached an agreement on a partial debt settlement in the case involving scandal-ridden fund 1Malaysia Development Berhad, or 1MDB, according to The Straits Times, which referred to information it obtained from senior financial executives familiar with ongoing negotiations.

Under a deal that could be signed as soon as April 21, Malaysia would pay Abu Dhabi $1.2 billion before the end of this year and negotiate on a further $3.5 billion in outstanding debt.

The first payment would be largely funded by the sale of assets held by Brazen Sky Ltd., a fund investment unit of 1MDB, which holds units in a Cayman Islands-registered fund worth around $940 million, to an undisclosed buyer. This settlement involves the repayment of a loan plus accumulated interest from a bailout that 1MDB received from Abu Dhabi’s state-owned International Petroleum Investment Co., or IPIC, in July 2015.

The units were previously managed by BSI Bank Singapore which had their banking license suspended by the Money Authority of Singapore in 2016, and were since with an unnamed custodian bank.

The two countries also 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 newspaper said. The loans from IPIC came under a $3.5 billion bond issue that Abu Dhabi helped Malaysia raise in 2012.

While 1MDB did not comment on the report, Malaysia’s second finance minister, Johari Abdul Ghani, told Bloomberg that “a proposed settlement is being handled by the 1MDB board and management, plus the prime minister’s department.”

Observers note that the settlement would significantly reduce the impact of any legal action taken by foreign governments over alleged money laundering at 1MDB by its representatives, including Malaysia’s Prime Minister Najib Razak.

This is because the disputed loans in the Malaysia-Abu Dhabi dispute are central to legal suits brought by the US Department of Justice over the alleged misappropriation of over $3.5 billion from 1MDB. The US claims that the funds siphoned from 1MDB were used to fund purchases of real estate and other assets by associates of Najib.

But a settlement would widely remove the basis for a US action against a serious offense involving the provision of funds for money laundering because of the lack of evidence, and also diminish the international legal challenges for Najib and his administration over the fallout from the 1MDB scandal.

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