AG says Malaysia doesn’t have to pay US$4.32b to IPIC as 1MDB defrauded

Thomas said Malaysia also has a right to recover the US$1.46 billion already paid to IPIC. ― Picture by Hari Anggara
Thomas said Malaysia also has a right to recover the US$1.46 billion already paid to IPIC. ― Picture by Hari Anggara

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KUALA LUMPUR, Oct 30 — The Malaysian government will ask the UK courts to affirm that the country does not have to pay a US$4.32 billion (RM18 billion) sum to Abu Dhabi's International Petroleum Investment Company or Aabar Investments PJS as Malaysia's 1Malaysia Development Berhad (1MDB) was allegedly defrauded by Datuk Seri Najib Razak, Attorney-General Tommy Thomas said today.

Thomas noted that an arbitration tribunal sitting in London had on May 9, 2017 recorded a consent award for Malaysia to pay US$5.78 billion to IPIC and the bond trustee over a five-year period, with US$1.46 billion of this sum already paid.

But Thomas said that the government of Malaysia will apply to the Courts of England for a court order to set aside the arbitration tribunal's consent award.

"We are pleased to report that the application will be filed today in the High Court in London.

"Malaysia will claim that as a result of the fraud, we are relieved from any obligation to pay the balance of the US$4.32 billion to IPIC or Aabar under the Consent Award, and additionally have a right to recover the US$1.46 billion already paid," he said in a two-page statement today.

Thomas said the Malaysian government is "confident that we have a strong case" for the consent award to be set aside, later explaining that this was due to the alleged fraud by former prime minister Datuk Seri Najib Razak.

"The basis of Malaysia’s legal challenge in the High Court in London is that the Consent Award was procured by fraud or in a manner contrary to public policy.

"The Court application relates to the knowledge of IPIC and Aabar of the serious allegations made by the United States Department of Justice (DOJ) against former Prime Minister and Finance Minister Najib Razak, who was also the moving spirit and ultimate decision maker in 1MDB," he said.

Thomas said IPIC and Aabar would have known of Najib's alleged fraud by the time of US attorney-general Loretta Lynch's announcement in the DOJ's July 2016 press conference of the department's filing of several civil suits to freeze assets allegedly purchased by "fraudsters from stolen proceeds" from sovereign wealth fund 1MDB.

Thomas noted that the alleged theft has been "popularly described as the greatest kleptocracy in modern history", and that the detailed allegations in the DOJ court documents had received tremendous global media publicity and had entered the global public domain by July 2016.

"Najib Razak is identified as “MO1” in the DOJ pleadings. Any reasonable reader reading these court documents would immediately become aware of his central role in defrauding 1MDB to the benefit of himself, his stepson and Jho Low," Thomas added.

"In such circumstances, Malaysia takes the position that IPIC and Aabar were aware of the fraud of Najib Razak. He was principally responsible for 1MDB and Minister of Finance Inc. consenting to the Award.

"Every system of law would hold that he could not possibly have acted in the best interests of his country and his company. Indeed, he did not. Fraud is an established ground to challenge the consent award for public policy reasons," he added.

Najib is currently facing 38 criminal charges, including over a RM42 million sum said to belong to a former 1MDB unit and in relation to over RM2 billion of funds believed to be 1MDB's and to over RM6.6 billion in government funds.

Thomas had explained that out of the total US$5.78 billion that Malaysia was obliged to pay under the consent award between the Minister of Finance (Inc) and the claimants IPIC and Aabar, Malaysia has so far paid US$1.45 billion.

He said the next interest payment of US$50 million is due this November 11 — which is almost two weeks away, while similar interest payments are payable periodically until April 2022.

He said the two final bullet payments of US$1.8 billion each for the principal and interest are due and payable in May and October 2022.

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