PUTRAJAYA - Troubled state investor 1Malaysia Development Berhad (1MDB) has been given a month’s extension to pay US$603 million (S$821 million) owed to Abu Dhabi’s sovereign wealth fund, after missing a July 31 deadline.
The International Petroleum Investment Company (IPIC) said in a filing to the London bourse that the new Aug 31 payment deadline will nonetheless incur “default interest on the delayed payment”.
“This extension is subject to MoF Inc. and 1MDB making payment of not less than US$310,000,000 of the full amount due on or before 12 August 2017,” it said, referring to the Finance Ministry’s holding company which owns 1MDB.
1MDB chairman Irwan Serigar also told reporters on Tuesday (Aug 8) IPIC agreed to a request for an extension after 1MDB said it had yet to receive money from the sale of investment fund units.
“In due course, when the time comes, we will pay it off. There are some regulatory requirements we need to comply with, which will take some time that we didn’t foresee,” said the Finance Ministry secretary general.
IPIC had warned after the July 31 deadline of “additional obligations” if the funds - the first of two payments to settle US$1.2 billion owed - were not received within a “five-business-day cure period”.
1MDB had said the need for added regulatory approvals meant that the money would only be received this month.
The payment was due as part of an April (2017) settlement between 1MDB and IPIC, after IPIC launched arbitration proceedings last year (2016) claiming US$6.5 billion from the Malaysian fund.
The second installment of US$603 million is due by the end of 2017.
The failure of 1MDB to redeem its investment fund units in time has led critics to question if the units have any value. Opposition lawmaker Tony Pua has alleged the units are fradulent, based on the United States Department of Justice (DOJ) filings this and last year seeking to seize US$1.7 billion out of an alleged US$4.5 billion siphoned from 1MDB.
Prime Minister Najib Razak was implicated in 1MDB's debt troubles - which at one time piled up to RM51 billion (S$16.2 billion) - after US$700 million linked to 1MDB - whose advisory board he chaired - was found in his personal accounts.
Malaysia’s public prosecutor cleared the premier of any criminal act last year after agreeing with Datuk Seri Najib’s assertion that the money was a political donation from the Saudi royals.
Last month, Mr Najib admitted there were “lapses in governance” in the state fund, but maintained that government investigations found no wrongdoing, and that 1MDB is undergoing rationalisation to rid itself of its heavy debts.