PUTRAJAYA: 1Malaysia Development Bhd (1MDB) will fight and not pay the US$6.5 billion claims made by International Petroleum Investment Co (IPIC) and Aabar Investments PJS via the London Court of International Arbitration.
Second Finance Minister Datuk Johari Abdul Ghani, speaking to reporters after chairing the 2017 Budget focus group meeting: Cost of Living here today, said the mention date for the IPIC arbitration will be in September.
"The dispute is about IPIC not acknowledging the British Virgin Islands-registered (BVI) Aabar Investments PJS Ltd, as its entity within its group,” he said.
It was reported that 1MDB had sent a total of $3.5 billion to Aabar BVI. All in, the 1MDB transfers to Aabar BVI included about US$1.4 billion from a privately placed bond that Goldman Sachs raised in 2012. The 1MDB fund also made payments of US$855 million, US$993 million and US$295 million as security deposits and other guarantees for the bond to the BVI firm.
The legal agreements were negotiated with Khadem Al Qubaisi in his capacity as managing director of IPIC and chairman of Aabar, or with Mohamed Badawy Al Husseiny, who was CEO of Aabar.
Johari said that as far as the Finance Ministry’s records are concerned, BVI-registered Aabar Investments PJS Ltd belongs to IPIC.
“The directors of these companies are both senior officials of IPIC. Now, IPIC suddenly say that the company doesn't belong to them. We want to see them in court. Let the arbitrator look at our documents.”
“As far as 1MDB is concerned, we have never dealt with these individuals. They have never dealt with us. If these individuals have any transaction with IPIC, that’s none of our business. All our investments are guaranteed by IPIC,” Johari added.
“This is an issue where everyone need to be very clear. We want to fight and we want to win this case. We cannot make statements that might weaken Malaysia’s position. Based on the documents 1MDB had forwarded to us, I’m very confident of a positive outcome. We are taking the position that we are not paying the interest. We shouldn’t pay. We must win this case,” the minister said.
Several weeks ago, US Attorney-General Loretta Lynch, accompanied by top US officials, told a press conference that the DOJ had filed civil complaints to seize over US$1 billion (RM4.06 billion) in assets, which it said were the result of US$3.5 billion misappropriated from 1MDB.
Lynch said the US$1 billion in assets were just a portion of the money that was stolen from 1MDB and laundered into American institutions in violation of US law.
In response, 1MDB said its 2013 and 2014 audited financial statements should no longer be relied on by any party, pending a civil case filed by the United States Department of Justice (DOJ) to be determined in court. IMDB also said it would appoint a new auditor to replace Deloitte, which announced its intention to resign on Feb 26, 2016.
Asked to comment on the implications of no longer relying on 1MDB's 2013 and 2014 audited accounts, Johari maintained there is no real impact.
“If you asked me before this, there were many implications and exposure with many banks. At that time, almost all the banks in town had exposure with 1MDB.”
“Today, 1MDB’s debts are all fully paid. All those local banks do not have exposure with 1MDB anymore. There should not be any more borrowing from 1MDB. It should be a run-off company. There's no impact, 1MDB will no longer use those audited accounts to go looking for money,” the minister said.