In 1MDB’s reply of the WSJ’s erroneous posting of USD850million transferred to the British Virgin Island accounts via three different transaction, it is believed that the USD690million to many ‘yet to be explained’ is actually interest income.
1MDB press realease:
Media statement by 1Malaysia Development Berhad
Issued on 17 December 2015
For immediate publication
We note with surprise that the Wall Street Journal continues its campaign to malign 1MDB, a campaign based on old and recycled allegations which were first published by an online blog, now known to be working hand in glove with certain political interests in Malaysia.
In fact, it is interesting that a number of opposition leaders and publications openly sympathetic to the opposition republished and commented on this latest article barely minutes after it was published, raising questions as to whether this too is part of a broader orchestrated campaign against 1MDB.
The fact is that the allegations contained within this article are simply a regurgitation of old claims carried by the Wall Street Journal in September, which it has re-written and re-published without offering any new information or evidence.
The timing of the article also raises questions, coming as it does at a time when 1MDB has made significant progress with its rationalisation process, as reflected in the successful execution of a Share Sale and Purchase Agreement with CGN Group, and the impending selection of a preferred development partner for its Bandar Malaysia project.
With respect to 1MDB’s past dealings with IPIC, the two companies continue to enjoy a strong business relationship. This was reflected in the execution of a binding term sheet that saw IPIC assume obligation for a USD3.5 billion bond principal and interest, currently held by 1MDB, and followed a USD1 billion cash payment made by IPIC to 1MDB in June 2015.
Furthermore, IPIC has since reaffirmed its commitment to working with 1MDB via a public statement issued in October 2015, and made interest payments on the aforementioned bond in October and November 2015.
Rather than engage in mud-slinging attacks against 1MDB, we ask those elements within the media and the opposition who are seemingly intent on derailing this process to await the results of the investigations currently being conducted by various independent lawful authorities, to whom 1MDB is extending its full cooperation.
That is in immediate response to the Wall Street Journal story about the purportedly three transaction their journo saw.
Malaysia’s 1MDB Sent $850 Million to Entity Set Up to Appear Owned by Abu Dhabi Wealth Fund
Transfer deepens mystery over 1MDB state-investment fund, which is under investigation in at least six countries
By BRADLEY HOPE
Updated Dec. 17, 2015 3:08 a.m. ET
A troubled Malaysian state investment fund sent at least $850 million last year to an offshore entity set up to appear that it was owned by an Abu Dhabi sovereign-wealth fund, a transfer which deepens the mystery over billions of dollars that are unaccounted for, according to documents reviewed by The Wall Street Journal and people familiar with the matter.
The 1Malaysia Development Bhd. fund, or 1MDB, set up by Malaysian Prime Minister Najib Razak in 2009 to promote economic development, is under investigation in at least six countries over a broad array of allegations that money was siphoned off for political spending and for personal gain.
One focus of investigation is $2.4 billion in payments that 1MDB said it made to a unit of Abu Dhabi’s International Petroleum Investment Co., or IPIC, as part of a deal involving the Malaysian fund’s purchase of power plants. The Journal reported in September that IPIC officials had concluded they did not receive the money, according to people familiar with the matter.
A 1MDB unit transferred at least $850 million via three transactions last year to a British Virgin Islands-registered company with a name that made it look like it was controlled by IPIC, according to wire transfer documents viewed by the Journal and two people familiar with the matter.
The 1MDB fund sent the money to “Aabar Investments PJS Ltd.” which closely resembles the name of IPIC’s wholly owned subsidiary Aabar Investments PJS, the wire documents show.
Malaysia’s 1MDB Decoded: How Millions Went Missing
The scandal involving Malaysian government-investment fund 1MDB and millions of dollars in missing money has caused a political crisis in an important U.S. ally in Asia. The WSJ explains this story of political intrigue and follows the money trail.
Aabar, the IPIC subsidiary, is an Abu Dhabi-registered company that holds prominent investments in the space tourism venture Virgin Galactic and a 5.1% stake in UniCredit SpA, Italy’s biggest bank.
Executives at IPIC and Aabar investigating the transfers have concluded neither of the two Abu Dhabi funds ever owned or controlled the British Virgin Islands company, according to the people familiar with the matter. Records in the British Virgin Islands don’t give any details on the owners or directors of the company.
The records show the British Virgin Islands firm was incorporated on March 14, 2012, and liquidated on June 23 this year, a time of growing criticism of 1MDB from opposition politicians and within Mr. Najib’s ruling party.
The 1MDB fund, in a statement to the Journal after publication of this article, did not reply to questions previously submitted about the transfers. The statement said “that the Wall Street Journal continues its campaign to malign 1MDB.” The fund also said it was cooperating with investigators. 1MDB in the past has said it stands by its financial statements, which show it made the payments to the Abu Dhabi fund.
An IPIC spokesman did not respond to questions. The Abu Dhabi fund hasn’t made any public statements about its relationship with 1MDB or the missing money.
Mr. Najib promised the fund would spur economic development by investing in new industries like renewable energy. But it has only bought existing power plants and land, while rolling up over $11 billion in debt that it is struggling to repay.
The transfers involving Abu Dhabi are among a series of transactions by 1MDB that are the focus of investigations. In Malaysia, the fund is being probed by the auditor general, the nation’s anticorruption body, the central bank and a parliamentary committee.
In 2012, 1MDB issued $3.5 billion in bonds to fund the purchase of power plants in Malaysia and overseas. The Abu Dhabi fund guaranteed the bonds.
The 1MDB fund’s publicly-available financial statements for the year ending March 31, 2013, show it paid $1.4 billion to IPIC’s unit Aabar as collateral for guaranteeing the bonds. The Malaysian fund said it paid another $993 million to Aabar in 2014 to cancel options granted to IPIC to buy a stake in 1MDB’s power assets, according to a copy of a draft report into 1MDB by Malaysia’s auditor general and 1MDB board minutes reviewed by the Journal.
Officials at IPIC say neither they nor any subsidiary received this money, the Journal reported. It is not clear why the payments were made to Aabar since IPIC made the guarantee.
IPIC’s consolidated financial statements, which include Aabar, make no reference to the collateral payment. A footnote in the 2014 statements said that as of the end of that year 1MDB owed IPIC $481.3 million in outstanding payments for the options.
No substantial amount of money was received by IPIC, the people familiar with the matter said. It isn’t clear how IPIC arrived at the $481.3 million figure and whether it relates to the $993 million transfer 1MDB says it made to IPIC as partial payment to cancel the options.
IPIC’s former managing director, Khadem Al Qubaisi, was dismissed in April by a presidential decree. The new management team of IPIC has been scrutinizing Mr. Al Qubaisi’s activity at the fund, according to the people familiar with the matter.
How $2.4 billion in payments from Malaysia’s 1MDB to the gulf emirate of Abu Dhabi appear to have gone missing.
A London-based representative of Mr. Al Qubaisi said he declined to comment.
The latest twist in the 1MDB saga comes as Mr. Najib battles a separate scandal linked to the fund. Malaysian investigators said earlier this year that nearly $700 million was transferred into his personal bank accounts through entities linked to 1MDB, including a private Swiss bank owned by IPIC.
The source of the funds was unclear and the government investigation didn’t detail what happened to the money that allegedly went into Mr. Najib’s accounts.
Malaysia’s anticorruption body in August said the funds were a donation from the Middle East. The donor wasn’t specified.
Mr. Najib has denied wrongdoing and said he didn’t use any money for personal gain. He said this month that using money from a donor was appropriate and legal.
As well as Malaysia and Abu Dhabi, authorities in the U.S., Switzerland, Singapore, and Hong Kong are looking at 1MDB’s activities.
—Nicolas Parasie and Yantoultra Ngui contributed to this article.
The USD600 million is derived from the USD5.5billion minus bond principal plus interest of USD3.5billion (USD1.75billion X 2) and the payment made to IPIC in March 2013 of USD1.4billion.
WSJ has been known to have fabricated their ‘evidence’ to justify their story.
The sum could be ‘channeled by the mysterious Arab’, probably because of the ‘non-shariah-compliant’ terms and nature of the net income derived from the commercial papers issued.
The principal-plus-net-interest-receivable could very well explain the ‘units’ for the residue of all the accounted bonds and borrowings by 1MDB, which baffled so many.
Non-shariah-compliant interest income is a likely sensitive matter for some West Asian investors and private wealth account holders.
1MDB did explain about the issuance of very long term bonds (30 years) when the strategic investment corporation started to raise fund through borrowings in he form of bonds, at the first few years of inception for the purpose of productive investments.
Regardless, it interesting how these ‘revelations’ would eventually bring out the truth which many already formed their conclusion based on previously fabricated and manipulated information.