Day: April 19, 2016

By Saeed Azhar and Umesh Desai
Reuters
EuroNews
19/04/2016

(Reuters) – The Malaysian government on Tuesday was facing the prospect of having to bail out the scandal-tainted state fund 1MDB, after a $4.6 billion (£3.2 billion) debt deal with an Abu Dhabi sovereign fund collapsed this week.

The International Petroleum Investment Company (IPIC) said on Monday that 1Malaysia Development Berhad’s (1MDB) had failed to make a $1.1 billion payment, and so was terminating last June’s debt deal.

“The government wouldn’t want to risk having a default on its books, so if it came down to it, they would want to keep a clean record,” said Krystal Tan, a Singapore-based economist at research firm Capital Economics, talking about risk of a bailout for 1MDB.

Any government intervention would pile more pressure on Prime Minister Najib Razak, who founded 1MDB and is on its advisory board. He has faced calls to step down over allegations of graft and mismanagement at the fund.

“It’s (agreement with IPIC) failure not only now places 1MDB itself at risk, but now involves a bailout by the Ministry of Finance,” opposition leader Tony Pua said in a statement.

The Malaysian finance ministry is the sole shareholder of 1MDB. Continue reading “Malaysia faces bailout question after $1 billion spat with Abu Dhabi fund”

By Una Galani
Breakingviews
Reuters
April 19, 2016

Malaysia’s effort to contain the financial fallout from its wayward sovereign fund is unravelling. Scandal-hit 1Malaysia Development Berhad is embroiled in a scrap with a state-backed investor in Abu Dhabi over a $4.5 billion debt deal. The risk for the southeast Asian nation is that its finance ministry will have to bear the burden. That’s exactly the outcome the fund championed by Prime Minister Najib Razak has been trying to avoid.

To recap, 1MDB racked up massive debts on a string of questionable deals. After it ran into trouble, it negotiated a lifeline last year from International Petroleum Investment Company, which is backed by Abu Dhabi royal Sheikh Mansour bin Zayed al-Nahyan.

IPIC agreed to lend 1MDB $1 billion and assume responsibility for bonds worth $3.5 billion. The quid pro quo was that IPIC would receive assets of equivalent value from the Malaysian fund by the end of June this year.

Now IPIC has missed an interest payment on 1MDB’s bonds. The details are sketchy, but the Gulf fund says it doesn’t have to honour the debt agreement because 1MDB hasn’t fulfilled its side of the deal.

In the end, both parties look foolish. After all, 1MDB’s financial woes owe much to alleged high-level corruption involving former officials on both sides. The fight looks set to end up in the courts. Continue reading “Malaysia is big loser from Abu Dhabi fight”

Yahoo7 News
AFP
April 19, 2016

Kuala Lumpur (AFP) – Malaysia’s prime minister and the company he founded, 1MDB, have weathered a year-long barrage of corruption allegations with nothing-to-see-here assurances, but a string of recent revelations is placing those denials under growing strain.

On Monday an Abu Dhabi sovereign-wealth fund which was helping 1MDB recover from massive debts abruptly withdrew its safety net, declaring the Malaysian state-owned company in default on a $1.1 billion loan.

The move centres on suspicions that 1MDB — rather than repay the loan to the Abu Dhabi fund, International Petroleum Investment Co (IPIC) — instead diverted the money, according to a Wall Street Journal report.

The dispute caps a string of recent revelations that have severely undermined claims by 1MDB — short for 1Malaysia Development Berhad — that its finances are in order and no graft occurred.

The scandal engulfing 1MDB and Prime Minister Najib Razak, who founded the company in 2009 to fund development projects, is staggering in its scale and complexity. Continue reading “Graft denials come under strain in Malaysia fund scandal”

Shamim Adam
Bloomberg
April 19, 2016

Malaysia’s debt-ridden state investment fund, which is facing the risk of a bond default, said it expects an interest payment to be made as it enters the start of a five-day grace period. The ringgit extended gains.

1Malaysia Development Bhd. has a cash surplus of about $550 million, or 11 times the $50 million amount due on interest that was payable on April 18, President Arul Kanda said in a Bloomberg Television Malaysia interview on Tuesday. The company is in dispute with Abu Dhabi’s sovereign wealth fund, which earlier agreed to pay interest on the bonds, and Kanda said he expects an “amicable resolution.” Continue reading “1MDB Expects Bondholders to Be Paid Amid Dispute With Partner”

Jeevan Vasagar in Singapore
Financial Times
April 18, 2016

The dispute between an Abu Dhabi sovereign fund and Malaysia’s troubled state fund 1MDB over more than $1bn in missing payments intensified on Monday when the emirates investment vehicle said its Malaysian counterpart was “in default” on an agreement between the two and terminated the deal.

The Gulf emirate’s International Petroleum Investment Company (Ipic) ended its relationship with its Southeast Asian counterpart in a filing to the London Stock Exchange on Monday.The Abu Dhabi fund said 1MDB and Malaysia’s ministry of finance were in default on the deal, including an obligation to pay $1.1bn plus interest, and that 1MDB continued to be bound by its commitments under the agreement.

The dispute relates to a pair of 1MDB bond issues in 2012, which were guaranteed by Ipic. The two funds entered into an agreement last year in which Ipic provided a $1bn cash bailout and agreed to make interest payments on the bonds. In return 1MDB agreed to transfer assets to Ipic.

Ipic was now considering options to remedy the alleged default, including referring the matter to the appropriate dispute resolution forum, it added in its regulatory filing. The move is the latest twist in an affair that has buffeted Malaysia’s government and prompted investigations in at least five countries including the US and Switzerland. Continue reading “1MDB dispute intensifies as Abu Dhabi ends relationship”

By TOM WRIGHT and BRADLEY HOPE
Wall Street Journal
April 18, 2016

Jho Low controlled hundreds of millions of dollars of money thanks to network of contacts, amassed riches himself

In March 2013, a young Malaysian financier sent a heads-up to an employee at a Kuala Lumpur bank that “681 American pies” would soon be arriving from overseas.

The sender, Jho Low, emphasized the need for secrecy, according to a transcript of BlackBerry instant messages reviewed by The Wall Street Journal. The employee, he wrote, should tell the bank’s chief executive that “PM” didn’t want his name, address or identity-card number to appear on the transaction.

Within days, $681 million arrived in two transfers at AmBank Bhd. to be deposited in the personal account of Malaysian Prime Minister Najib Razak, according to documents seen by the Journal.

Global investigators believe those transfers represent a portion of the money diverted from a Malaysian state economic-development fund called 1MDB over several years, according to people familiar with probes in two countries. As they dig deeper, investigators have increased their estimates of siphoned funds to as much as $6 billion, a sharp increase from a few months ago, said a person familiar with one country’s probe. Continue reading “Confidant of Malaysia Prime Minister Najib Had Central Role at Troubled 1MDB Fund”

The past fortnight had been a disastrous two weeks for the Prime Minister Datuk Seri Najib Razak and his close ally Penang billionaire Jho Low’s brainchild, the 1MDB Malaysia sovereign fund but it has been downright nightmarish for Malaysia in confirming the country as among the world’s top scandal-ridden nations.

The Public Accounts Committee (PAC) Report on 1MDB, meant to be the centerpiece of a media scam by Najib’s strategists to create the myth that it had exonerated Najib from any wrongdoing in the RM50 billion 1MDB and RM4.2 billion “donation” twin mega scandals proved to be a dud.

In a matter of four days, the media scam was thoroughly exposed and discredited when firstly, detailed reading showed that the PAC Report had not made any such conclusion or finding to exonerate Najib, and secondly, when the Abu Dhabi-state owned International Petroleum Investment Company (IPIC) in a statement to London Stock Exchange on 11th April stated that neither it nor or its subsidiary Aabar Investments PJS had any links or received US$3.5 billion which 1MDB had paid to the phoney British Virgin Islands-incorporated Aabar Investments PJS Limited (Aabar BVI) .

This was followed by the desperate attempt to salvage the situation by enlisting the Saudi Foreign Minister Adel Al-Jubeir to declare that the billions of ringgit deposited into Najib’s personal banking accounts were “a genuine donation” from Saudi Arabia “with nothing expected in return”. Continue reading “With the sudden RM14 billion 1MDB bailout crisis, time to have a new Prime Minister and a new Finance Minister to clean up the Augean Stables caused by Najib’s twin mega global scandals”

Leslie Lopez Regional Correspondent In Kuala Lumpur
Straits Times
19th April 2016

$4.7b bond raised by 1MDB thrown into limbo as KL-Abu Dhabi row escalates

The dispute between Abu Dhabi’s second-largest wealth fund and Malaysia’s state-owned 1Malaysia Development Berhad escalated yesterday after the Arab emirate group declared Kuala Lumpur’s fund was in default of a multibillion-dollar financial assistance arrangement.

The declaration by Abu Dhabi’s International Petroleum Investment Company, or IPIC, against 1MDB immediately throws into limbo a complex US$3.5 billion (S$4.7 billion) international bond the Malaysian fund raised in May 2012 with full, iron-clad guarantees from the tiny oil-rich emirate’s business entities.

And because of the protracted nature of the disagreement, financial executives tracking developments in the bitter feud say that international investors, who subscribed to the bonds that were arranged by international banking group Goldman Sachs, may have to wait a long time before they are compensated. Continue reading “1MDB in default, declares Gulf fund”

19 Apr 2016
Channel News Asia

An Abu Dhabi sovereign-wealth entity said on Monday that the Malaysian state fund 1MDB had defaulted on US$1.1 billion it owed in a new blow to the scandal-tainted company.

KUALA LUMPUR: An Abu Dhabi sovereign-wealth entity said on Monday (Apr 18) that the Malaysian state fund 1MDB had defaulted on US$1.1 billion it owed in a new blow to the scandal-tainted company.

The announcement, made in a filing to the London Stock Exchange by Abu Dhabi-based International Petroleum Investment Co (IPIC), raised the spectre of Malaysian market turmoil if 1MDB is unable to dig out from under its huge debts.

1MDB, or 1Malaysia Development Berhad, was founded by Malaysian Prime Minister Najib Razak in 2009 but is now teetering on the verge of default amid multiple investigations around the world into allegations that billions were looted from it.

IPIC had agreed in 2012 to guarantee US$3.5 billion in 1MDB bonds, lend it more than a billion dollars, and make interest payments on the bonds.

In its statement, IPIC said 1MDB and its owner, Malaysia’s Finance Ministry, had failed to pay back more than US$1.1 billion they owed. “As a result, 1MDB and MOF are in default,” IPIC said. Continue reading “Malaysia’s 1MDB defaults on US$1b loan, says Abu Dhabi fund”

Shamim Adam
Bloomberg
April 18, 2016

Malaysia’s troubled state investment company faces the threat of default after a dispute with an Abu Dhabi sovereign wealth fund leaves bondholders waiting for an interest payment due Monday. 1MDB’s dollar bonds slumped.

Abu Dhabi’s International Petroleum Investment Co. said its obligations of financial support to 1Malaysia Development Bhd. have ended after the company and Malaysia’s finance ministry failed to pay it more than $1 billion, according to a stock exchange filing. IPIC, which agreed last year to pay interest for 1MDB bonds that it guaranteed, didn’t mention the Monday payment due.

1MDB said bondholders haven’t been paid, and didn’t say if it would do so. The Malaysian finance ministry said it had been informed by 1MDB of the dispute, and “wishes to make clear that it will continue to honor all of its outstanding commitments in the financial markets.”

Failure for either side to fulfill the debt obligation could result in the first default for 1MDB since its inception in 2009, deepening its troubles at a time when it’s the target of global investigations into allegations of money laundering and embezzlement. Authorities from the U.S. to Switzerland are trying to determine if some of the billions of dollars that 1MDB raised were siphoned out inappropriately. Continue reading “Malaysia’s 1MDB at Risk of Default as Partner Ends Bond Support”