AG: Malaysia seeks to recover US$3.5b paid to IPIC

AG: Malaysia seeks to recover US$3.5b paid to IPIC

PUCHONG: The government plans to mount a legal challenge on the UK commercial court’s decision for a closed-door arbitration between its debt-ridden 1Malaysia Development Berhad (1MDB), International Petroleum Investment Company (IPIC) and Aabar Investments PJS (Aabar).

In a statement, Attorney General Tommy Thomas said both the Minister of Finance Incorporated (MOF Inc) and 1MDB have filed an application for permission to appeal against London Commercial Court’s decision to allow arbitration proceedings to be determined behind closed doors.

For now, he said, the arbitration proceedings will proceed under the UK court’s supervision.

“If the government succeeds in the UK court, Malaysia will able to proceed to seek the recovery of US3.5 billion that was paid by 1MDB subsidiary to IPIC’s subsidiary.

“Alternatively, it will reduce Malaysia’s liability to pay interest and principal under the 2012 bonds that were guaranteed by IPIC to US3.5 billion,” said Thomas.

Thomas added that the proceedings were measures to recover substantial amounts of money wrongfully paid by the previous 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 focused in its attempts to ensure that Malaysia’s assets are recovered,” he said.

Thomas also said the judge in the London Commercial Court, Justice Knowles, had described the case before him as a ‘rare and compelling’ situation, and agreed that there were underlying issues involving ‘massive fraud’ between the parties that must be heard openly before an arbitration.

Last year, the government filed an order to set aside a consent award that was recorded by an arbitration tribunal on May 9, 2017 between IPIC and Aabar, as claimants and 1MDB and MOF Inc as respondents.

Thomas said that under the consent judgment, Malaysia was to pay US5.78 billion to IPIC and the bond trustee over a five-year period, a sum which he said was obtained through fraud.

In response, IPIC and Aabar applied to strike out or stay this application by 1MDB and MOF Inc, and initiated another arbitration proceeding against Malaysia to challenge the consent award entered during former prime minister Datuk Seri Najib Razak’s administration.

However, Thomas said, the case was rejected by the same London Commercial Court.

“The rejection was made under Section 9 of the UK Arbitration Act 1996 to stay 1MDB and MOFI’s application pending determination of parallel arbitration proceedings,” he said.

Thomas added that Malaysia has paid US1.6 billion as of May, leaving a balance of US4.16 billion that represents the remaining interest and principal payable to the bond trustee for the 1MDB bonds.

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