1MDB’s RM24b IPIC court case put on hold

LONDON • Malaysia’s bid to challenge a US$5.8 billion (RM24.24 billion) settlement with International Petroleum Investment Co (IPIC) on the basis that the agreement was “procured by fraud” has been put on hold by a London court to allow further arbitration to take place.

Judge Robin Knowles ruled yesterday that he would grant a “temporary” stay of “indefinite duration” over the country’s lawsuit. Malaysia is seeking to overturn a deal that required Malaysia to make multibillion dollar payments to the Abu Dhabi wealth fund, over work with the scandal-hit state investment firm 1Malaysia Development Bhd (1MDB).

Malaysia’s new government last year challenged the 2017 IPIC deal in the UK courts, arguing that IPIC and its Aabar Investments PJS unit were aware of fraud allegations against former Prime Minister Datuk Seri Mohd Najib Razak at the time the deal was struck.

Najib was “principally responsible” for consenting to the US$5.78 billion award and he “could not possibly have acted in the best interests of his country and his company”, Malaysia’s Attorney General Tommy Thomas said in an outline of the case in October. He sought to recover the US$1.46 billion already paid and relieve Malaysia of any obligation to pay the remainder.

IPIC guaranteed two separate dollar-denominated bonds for 1MDB in 2012 in deals arranged by Goldman Sachs Group Inc that raised US$3.5 billion.

It’s the latest episode in the scandal over 1MDB, a government investment company that took shape in 2009 and was supposed to promote development. The US Department of Justice said more than US$4.5 billion flowed from the fund through fraudulent shell companies to corrupt officials and their associates. — Bloomberg