Money ‘wrongfully paid’ to IPIC by Najib’s government.
The Malaysian government is challenging a UK commercial court decision for closed-door arbitration between 1Malaysia Development Berhad (1MDB) and International Petroleum Investment Company (IPIC) and Aabar Investments PJS (Aabar).
In a statement today, Attorney-General Tommy Thomas said both the Minister of Finance Incorporated (MoF Inc) and 1MDB have filed an application for permission to appeal against a London Commercial Court decision to allow arbitration proceedings to be determined behind closed doors.
He said that for now, the arbitration proceedings will proceed under the UK court’s supervision.
He added that if the government succeeds in the UK court, “Malaysia will be able to proceed to seek recovery of US$3.5 billion that was paid by 1MDB subsidiaries to IPIC subsidiary, or in the alternative, reduce Malaysia’s liability to pay interest and principal under the 2012 Bonds that were jointly guaranteed by IPIC up to US$3.5 billion”.
In lieu of the appeal filed, Thomas said the proceedings were steps to recover substantial amounts of money wrongfully paid by the Najib administration.
“As shown by the realisation of assets in recent recovery exercises, the Government’s efforts in seeking justice for the Malaysian people following what has been described as “kleptocracy at its worst” is bearing fruit.
“The Government remains single-mindedly focussed in its attempts to ensure that Malaysia’s assets are recovered,” he said.
He said Justice Knowles of London Commercial Court considered that the case before him to be one of those “rare and compelling” situations where he permits the underlying issues between the parties to be first heard openly in the ongoing arbitration.
Thomas said 1MDB and MoF Inc filed the application in the Commercial Court in London, United Kingdom, in October last year to challenge a Consent Award that the two Malaysian parties had recorded under Najib administration in May 2017 with IPIC and Aabar.
He said the Consent Award was to conclude the arbitration proceedings that IPIC and Aabar commenced against 1MDB and MoF Inc before the London Court of International Arbitration (LCIA) tribunal in 2016.
“The challenge is brought on grounds, amongst others, of fraud and public policy. In response, IPIC and Aabar applied to strike out or stay this application by 1MDB and MoF Inc, and commenced a separate second arbitration proceeding against 1MDB and MoF Inc,” he added.
The A-G also said under the Consent Award, Malaysia is obliged to pay US$5.78 billion to IPIC and the Bond Trustee over a five-year period.
Thomas said the allegations before the London Commercial Court were that the Settlement Deeds and the Consent Award were engineered by Najib as part of a conspiracy to defraud and that IPIC and Aabar knew that Najib was acting contrary to the interests of MoF Inc and 1MDB.
Thomas said Malaysia has paid US$1.6 billion as at May this year, leaving a balance of US$4.16 billion that represented the remaining interest and principal payable to the bond trustee for the 2012 1MDB bonds.