1MDB denies failure to pay $1.9b to Abu Dhabi fund

KUALA LUMPUR • Troubled investment firm 1Malaysia Development Berhad (1MDB) dismissed a report yesterday by The Wall Street Journal (WSJ) alleging that an Abu Dhabi state investment fund has not received its payment of US$1.4 billion (S$1.9 billion).

WSJ's report claimed that the United Arab Emirates has raised questions about the sum, which allegedly never reached its investment fund International Petroleum Investment Co (Ipic).

The disputed payment is related to the purchase of power plants around the world by 1MDB in 2012.

WSJ said Ipic guaranteed the US$3.5 billion in bonds that 1MDB issued to finance the purchase. In return, Ipic was to receive options to buy a 49 per cent stake in the power plants as well as collateral for the bond.

1MDB said its records show the US$1.4 billion payment was made, reported Malay Mail Online.

"What we can confirm is that the 1MDB audited financial statements clearly describe the amount and purpose of the payments, which for the avoidance of doubt, is structured as a deposit (that is a financial asset belonging to 1MDB and not an expense to 1MDB)," it said.

1MDB said it can also confirm that Ipic did provide and continues to provide the guarantees for the principal and interest of two US$1.75 billion bonds it had issued, with a total principal and interest amount of approximately US$5.5 billion.

But while the 1MDB financial statements said the US$1.4 billion was paid as collateral, WSJ reported that the auditor-general's draft report on 1MDB said the sum went to Ipic's subsidiary Aabar Investments PJS. WSJ also quoted two sources familiar with the issue as saying that Ipic's consolidated financial statements do not mention receiving the amount.

1MDB criticised WSJ's report as biased and sensationalist. It also said WSJ might have breached Malaysian laws by referring to the "transcript of the proceedings" of a Malaysian parliamentary committee investigating the firm.

It said any information given to a parliamentary committee cannot be published until after the committee presents its report to the House.

"1MDB strongly urges the relevant authorities to investigate this matter thoroughly and take all requisite action to preserve the process integrity and Standing Orders of the Malaysian Parliament," it said.

A version of this article appeared in the print edition of The Straits Times on September 10, 2015, with the headline '1MDB denies failure to pay $1.9b to Abu Dhabi fund'. Print Edition | Subscribe