Friday, April 21, 2017

The deal that will force the DOJ to review what little it has on 1MDB

"... the deal could significantly dilute the international legal challenges confronting Prime Minister Najib Razak’s administration over the fallout from the 1MDB saga." - Malaysia, Abu Dhabi to settle dispute over 1MDB debt, Straits Times 

Friday, 21 April: Unless I'm getting it totally wrong, the US Department of Justice would be compelled now to review its position on the 1MDB. Might even have to drop the case altogether ...

The Straits Times' exclusive:

KUALA LUMPUR - Malaysia and Abu Dhabi have reached a settlement on a dispute involving billions of dollars in debt obligations of scandal-scarred 1Malaysia Development Berhad (1MDB) that is at the centre of an international money-laundering probe. 
Senior financial executives familiar with ongoing negotiations told The Straits Times that state-owned investment funds from both countries were expected to sign a settlement agreement as early as Friday (April 21). 
A central piece of the proposed settlement calls for Malaysia to repay Abu Dhabi US$1.2 billion (S$1.7 billion) before the end of this year. The amount represents a loan and accumulated interest charges on a bailout financial package 1MDB received from Abu Dhabi’s International Petroleum Investment Company, or Ipic, in July 2015. 
The bulk of the payment on the outstanding loan amount will come from the sale of so-called “fund units” from Brazen Sky Ltd, a financial unit owned by 1MDB, to an undisclosed buyer, according to the financial executives. 
The settlement agreement also calls for both parties to enter into negotiations to resolve another dispute involving roughly US$3.5 billion in the form of cash advances and payments from 1MDB to IPIC that are now in dispute. Negotiations will commence early next year and must be concluded before December 2020, during which time both parties will stand down from pursuing any legal action, the executives said.
The cash advances were part of Malaysia’s obligations under a US$3.5 billion bond issue that Abu Dhabi helped Kuala Lumpur raise in 2012. Under the proposed settlement, the Malaysian government will honour all obligations to its international bondholders.  
Bankers and legal executives familiar with the situation believe the deal could significantly dilute the international legal challenges confronting Prime Minister Najib Razak’s administration over the fallout from the 1MDB saga.
Here is why. The disputed monies in the Malaysia-Abu Dhabi row are central to legal suits brought by the US Department of Justice over the alleged misappropriation of funds from 1MDB. The Department of Justice claims that the funds siphoned from 1MDB went to fund purchases of real estate and other assets by associates of PM Najib.  
The settlement agreement between Malaysia and Abu Dhabi would achieve what is known in legal parlance as “no predicate offence”, the financial executives said.   
A predicate offence is a crime that is a component of a more serious crime and it is frequently applied in the US to actions involving the provision of funds for money laundering and the financing of terrorism. 
Proponents of the settlement between Malaysia and Abu Dhabi argue that a successful completion of the deal would weaken the impact of any legal action taken by foreign governments over alleged money laundering at 1MDB because of the lack of evidence. 
Malaysia’s Second Finance Minister Datuk Johari Abdul Ghani and 1MDB’s group executive director, Arul Kandasamy, who are part of the high-powered team leading the negotiations to resolve the dispute, did not respond to requests for comment. 
“The main aim was to avoid a messy arbitration fight and this (deal) is a product of both parties working through back channels to reach a settlement,” one senior executive noted. 
The executive disclosed that that other key players in the negotiations included Datuk Amhari Efendi Nazaruddin, who is a senior advisor to Mr Najib, and senior officials from Abu Dhabi’s Executive Affairs Authority, a special government agency that provides strategic advice to the Gulf state’s rulers. 
First reported by The Straits Times in April last year, the dispute between the two countries centered on fund transfers of roughly US$3.54 billion that 1MDB said it made to units of IPIC as part of its obligations under a May 2012 bond agreement. But IPIC declared that it never received those monies, triggering a row over interest payments on the bond issue which had helped 1MDB raise funds for the acquisition of power-generation assets. 
IPIC declared 1MDB in default later after the Malaysian state investment fund refused to honour an interest instalment of US$50.3 million, a move that exposed the Malaysian government to billions more in claims.  
As the dispute moved into private arbitration, the 1MDB scandal grabbed global attention with the US Justice Department filing lawsuits in Los Angeles seeking to seize dozens of properties and luxury assets that it claimed were purchased with funds amounting to over US$3.5 billion. US officials said the funds were illegally siphoned from the Malaysian state fund. 
The Justice Department probe, which is ongoing, is moving in tandem with investigations in several other jurisdictions, including Singapore, Switzerland, and Hong Kong. 
Mr Najib and 1MDB have repeatedly denied any wrongdoing and have pledged to cooperate with any lawful investigations. 


  1. drMpower8:52 am

    Why DOJ have to consider cancelling everything?
    Just because they settle it back door?
    The allegation isnt about back door or front door, its about siphoning monies
    And money laundering.

    This is like saying to the police who issued you speedticket for speeding, its okay i overspeed because i have ABS

    Not that we want the DOJ to start prosecution
    It just we dont want any other people to steal or, allegedly steal
    Or worse, we dont people allegedly steal and then go scotsfree because can kautim back door

  2. xnakdedak10:45 am

    "Unless I'm getting it totally wrong, the US Department of Justice would be compelled now to review its position on the 1MDB. Might even have to drop the case altogether ..."

    Congratulations, you got it completely wrong.

    The US can still proceed with any violations of its own laws and how they were turned into illegal assets.

    Then your fat boy Jho and Riza and Pinklips will still have to answer.

    However, as ever Latuk, thanks for putting the rakyat over your own financial interests.

    You're a credit to journalists everywhere : )

  3. Anonymous11:27 am

    Aiya Latuk lu bikin malu la, "agreement to settle dispute" bukan cakap itu Najib talak culi 1MDB punya luit. Ini macam punya "agreement" sapa pun boleh bikin mau cover up ma...

  4. Rocky Bru, the Munafiq Raja Petra,like typical of other Malaysians like to be keyboard warriors. Spin doctors. Always jumping the gun!!! The fact of the matter is "no predicate offence" shall NOT dilute US DOJ lawsuits. This offence was factored when the DOJ took of with the investigation.

  5. Ehmmm... not even once, was Jho Low's name mention... by you or The Straits Time.

    By the looks of it... #Hidup UMNO-Najib, Hidup Jho Low.

  6. Anonymous1:09 pm

    The DOJ has an avalanche of evidence regarding 1MDB. It does not need any further evidence to prosecute all those involved. It is just playing the waiting game. Their time will come. The US will prosecute them all. And this new deal? Well, it can't unlock the civil case - unless somebody from the UMNO administration gets on a plane to the US and takes the stand as a witness against the DOJ filing. We all know that will never happen. Because contempt in the US courts will get you a few years for your trouble. And nobody has gone so far.

  7. Who benefits Rocky? Malaysians? Or just those few crooks up there?

  8. Rocki's drool7:40 pm

    Ko biar betul? Ko ingat kes DOJ tu pasal ipic je ke? Sudahla tu din. Agak2 la nak membodohkan diri.

  9. Anonymous1:42 am

    So where exactly did the money that our taxpayers now have to pay Abu Dhabi?? Overdose dedak la lu Rocky! You are becoming as moronic as your dedak giver....hehe

  10. arizmaya9:57 am

    no comment allowed?

  11. xnakdedak1:01 pm

    Whatever qualifications were achieved by Mohd Puad Zakarshi, they plainly did not demand logic.

    Because, the settlement by 1MDB doesn’t undermine the DOJ case, to the contrary it confirms it. Period.

    If 1MDB had really paid $3.5 billion in ‘guarantee deposits’ to IPIC, as Najib continues to laughably claim, then Malaysia would never have lost the arbitration case and been forced to pay back the $1.2 billion that IPIC later bailed them out with.

    Instead, the court would have pointed out that the bail out was just a third of the up-front deposit and IPIC would actually still have over $2 billion of 1MDB’s money left.

    This is not what has happened. The settlement involves an agreement by 1MDB to pay back the bail out money and to take over the responsibility for the remainder of its debts.

    It is therefore a concrete admission by Malaysia that it could not prove its claims that it had deposited a single cent let alone billions with IPIC.

    And that means that the money trails supplied by the DOJ investigations, showing instead that all the money was siphoned off into a bogus BVI account to pay for Jho Low, Rosmah and Khadem Al Qubaisi’s fun and frolics, has been confirmed by the settlement and not weakened.

    It is plain as daylight, yet this Minister of Disinformation is attempting to say the opposite. How stupid does he think people are in Malaysia?

    He is also asking people to believe that the payment is going to come from the ‘monetisation’ of non-existant ‘units’ that 1MDB also doesnt have, because all the PetroSaudi money was funnelled into another off-shore company (Good Star Limited) and stolen as well.

    Puad says we should believe his story because the PM’s office said it (just like they said IPIC received money which it didn’t).

    So, who is going to believe this illogical and mendacious fellow when he goes on to say that Najib won’t be touching taxpayer’s funds to repay the debt?

    Is there a single voter who believes that?

  12. Rocky, for once, tenguklah balik bumi yang kau pijak dan langit yang kau junjung. Duit tidak boleh melambatkan kematian..