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Ipic and 1MDB settle dispute

Ipic and 1MDB settle dispute

1Malaysia Development Berhad (1MDB) and International Petroleum Investment Company (IPIC) have agreed on a settlement of the arbitration proceedings at the London Court of International Arbitration.

The filing says Malaysian officials also have agreed to cover all payments on two $1.75 billion bonds.

However, in June 2016, IPIC announced that 1MDB had failed to perform its contractual obligations and fled for arbitration.

A source aware of the discussions said both parties will continue talks until December 2020 over $3.5 billion linked to the two bonds, and no legal action will be pursued.

These include the $1.75bn 5.75 per cent fixed rate notes due 2022 and $1.75bn fixed rate 5.99 per cent notes due 2022, both issued by 1MDB entities. It had also extended a loan of $1 billion to 1MDB.

The agreement is conditional on the Arbitration Tribunal in London making a "consent award" by May 31.




Assume liability for future payments of interest and the principal for two bonds totalling US$3.5 billion previously co-guaranteed with IPIC. However, last April, IPIC said 1MDB and MoF Inc were "in default".

Last year, 1MDB and its CEO, Arul Kanda Kandasamy, informed the auditor-general and the Public Accounts Committee (PAC) that the following payments were made to Aabar Investments PJS Limited, a separate company registered in the British Virgin Islands (Aabar BVI). However, 1MDB and Arul Kanda (photo) continued to insist that it is a wholly-owned subsidiary of the IPIC group.

In response, Datuk Seri Tengku Sarifuddin Tengku Ahmad, press secretary to Prime Minister Datuk Seri Najib Razak, said the government is pleased that IPIC and 1MDB have resolved their differences in an amicable manner.

1MDB said that the settlement and monetisation of the investment fund units represented the resolution of a significant challenge, and formed a major part of its rationalisation plan in the final stages of being concluded. The sovereign fund, set by by Najib, who chaired the fund's advisory board, is still the subject of investigations in various countries, including Singapore, the United States and Switzerland.

"The latest act of settling the debt dispute just means that the 1MDB issue is settled. and this paves the way for elections", Oh Ei Sun, Senior Fellow at S.Rajaratnam School of International Studies, said.

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