Abu Dhabi’s state-owned International Petroleum Investment Co (Ipic) and its unit Aabar Investments PJS have agreed to pay $1.8 billion (8.06 billion ringgit) to settle a legal dispute over the scandal at state fund 1MDB, Malaysia’s finance ministry said today.
Malaysia in 2018 filed a challenge in a London court against a settlement agreement between 1MDB and Ipic that had been negotiated a year earlier during the leadership of Najib Razak.
The former prime minister Najib was sentenced to 12 years in jail last year after being found guilty in a 1MDB-related corruption case.
In its challenge, the government had argued that the 2017 settlement was procured by fraud.
The finance ministry said on Monday that the Abu Dhabi companies, 1MDB and the Minister of Finance (Incorporated) had reached a settlement in respect of proceedings in the London Court of International Arbitration and the London High Court.
“With this settlement, Malaysia and Abu Dhabi look forward to continue working together for the prosperity and economic benefit of both countries in the future,” the ministry said in a statement.
1MDB is the subject of corruption and money-laundering investigations in at least six countries.
An estimated $4.5 billion was misappropriated from 1MDB by high-level officials of the fund and their associates between 2009 and 2014, the US Justice Department has alleged.
In 2019, Putrajaya’s bid to challenge the US$5.78 billion settlement between 1MDB and IPIC in a London court was put on hold by judge Robin Knowles to allow further arbitration.
Knowles ruled that he would grant a “temporary” stay of “indefinite duration” over Malaysia’s claim that its agreement to the settlement should be overturned, as it was “procured by fraud”.
Malaysia’s then attorney-general, Tommy Thomas, said Najib was “principally responsible” for consenting to the $5.78 billion award and “could not possibly have acted in the best interests of his country and his company”.
He sought to recover the $1.46 billion already paid and relieve Malaysia of any obligation to pay the remainder.
In November 2021, Putrajaya was given the go-ahead by a London judge to continue its pursuit against IPIC, Abu Dhabi’s sovereign wealth fund, for its role in the 1MDB scandal.
Judge Andrew Baker granted an extension of time for the claim to be properly served to bring this “unusual” case to a full trial, saying that while it was undoubtedly an exceptional length of extension to grant, “this is an exceptional case”.
The London case was one of a series of legal and regulatory probes around the world, including the US and Malaysia, surrounding 1MDB.
- Reuters with additional editing by Jim Pollard