Malaysia seeks relief from US$5.78b payment to IPIC, Aabar

KUALA LUMPUR (Oct 30): Malaysia is seeking to relieve itself from the obligation to pay the balance of the US$4.32 billion to International Petroleum Investment Co (IPIC) or Aabar Investments PJS by applying to the Courts of England for an order to set aside a Consent Award recorded on May 9, 2017 by an Arbitration Tribunal sitting in London.

It is also seeking the right to recover the US$1.46 billion already paid to IPIC and Aabar.

"The application will be filed today in the High Court in London," Attorney General Tommy Thomas said in a statement today.

"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 added.

Thomas said the Malaysian government is "confident that we have a strong case".

According to Thomas, 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 US Department of Justice (DoJ) against former prime minister and finance minister Datuk Seri Najib Razak, who was also the moving spirit and ultimate decision maker in 1MDB.

"Such knowledge on their part was acquired, 'inter alia', no later than the time when the DoJ’s press conference was held by the US Attorney General Loretta Lynch in July 2016 when she announced the filing by DoJ of several civil suits for the freezing of assets purchased by fraudsters from stolen proceeds, and popularly described as the greatest kleptocracy in modern history.

"The grave, detailed allegations in those DoJ court documents were given tremendous global publicity, particularly in the political and business media. They had certainly entered the global public domain by July 2016. Najib 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 Low Taek Jho or Jho Low," said Thomas.

He added that Malaysia takes the position that IPIC and Aabar were aware of the fraud of Najib.

"He was principally responsible for 1MDB and Minister of Finance Inc (MoF 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," the attorney general said.

The arbitration, conducted under the Rules of the London Court of International Arbitration, was between IPIC and Aabar as claimants, and 1MDB and MoF Inc as respondents.

Under the Consent Award in 2017, Malaysia is obliged to pay US$5.78 billion to IPIC and the bond trustee over a five-year period.

"So far, US$1.46 billion has been paid, leaving a balance of US$4.32 billion, with the next interest payment of US$50 million due on Nov 11, 2018," said Thomas.

"Similar interest payments are payable periodically until April 2022. The final bullet payments, representing principal and interest of US$1.8 billion each, are due and payable in May and October 2022," he added. — theedgemarkets.com

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