This article first appeared in The Edge Financial Daily on April 27, 2017
KUALA LUMPUR: The government is looking at the bigger picture of the relationship between Malaysia and Abu Dhabi, when it agreed to pay the latter’s International Petroleum Investment Co (IPIC) US$1.2 billion (RM5.22 billion) in settlement of a debt dispute between IPIC and embattled government strategic investment fund 1Malaysia Development Bhd (1MDB), according to Second Finance Minister Datuk Seri Johari Abdul Ghani.
“The settlement was made by the government. The negotiation for the settlement was made by 1MDB and the PM’s Office (Prime Minister’s Office). I wasn’t involved in this settlement. But yes, I am involved in the rationalisation and disposal of some of the investments of 1MDB. I am also involved in the arbitration process.
“At the end of the day, the government is looking at the bigger picture of this, in terms of the relationship between Malaysia and Abu Dhabi. That is beyond me. I was going with the facts, but now this is a bigger thing,” Johari said after attending CIMB Group’s 2017 Labour Day celebration yesterday.Last August, Johari was reported as saying that Putrajaya was confident 1MDB would win the arbitration case filed by IPIC to obtain some US$6.5 billion from 1MDB and the ministry of finance (MoF) in a debt dispute.
The dispute started early last year when both IPIC and its subsidiary Aabar Investments PJS (Aabar) said in a joint statement that a British Virgin Islands-incorporated firm with an almost identical name, Aabar Investments PJS Ltd (Aabar BVI), “was not an entity within either corporate group”. 1MDB, however, transferred US$3.5 billion to the entity in 2012; the sum was payment it was supposed to make to Aabar.
Johari said yesterday it is normal for disputed parties to opt for a settlement during an arbitration process.
As for Aabar BVI, he said both parties had agreed to enter into discussions in relation to payments made by 1MDB Group to certain entities, which, to him, signalled that if the money was confirmed paid to Aabar BVI, both parties would collaborate to recover it.
Further, he said there was evidence confirming that Aabar BVI is indeed a subsidiary of IPIC, even though the latter has denied it, but did not elaborate on what the evidence was. In the meantime, he said: “Let 1MDB monetise all its assets, [and] bring back all the investments they have saved in the past”.
On an unrelated note, CIMB Group Holdings Bhd group chief executive officer Tengku Datuk Seri Zafrul Aziz, who was also present at the event, expressed his optimism about the outlook for Malaysia’s economy this year, despite rising cost of living. “We are still optimistic about the outlook for the economy. Yes, inflation is at a high level currently but we think domestic consumption would still see a slight growth this year,” Zafrul said.