Abu Dhabi’s Ipic seeks $6.5 billion from 1MDB, Malaysia in arbitration bid
Abu Dhabi’s International Petroleum Investment Company (Ipic) has filed with a London court to arbitrate its claim against entities of the Malaysian government for US$6.5 billion.
The filing yesterday by Ipic and its subsidiary Aabar Investments involves a long-running dispute between Ipic and strategic state fund 1Malaysia Development Bhd (1MDB), which was set up in 2009 by Malaysia’s prime minister, Najib Razak.
Four years ago, Ipic guaranteed $3.5bn of 1MDB bonds but claims it has not received payment for the guarantee or other monies and interest owed.
In a filing with the London Stock Exchange last month, Ipic said it had to make good on its guarantee – the third default by 1MDB – with an interest payment of more than $52 million.
Ipic also said that it would demand 1MDB and the Malaysia’s ministry of finance, which owns the fund, make good on an amount owed under the terms of a deal last year in which Ipic agreed to extend additional support to 1MDB, including covering $1bn of interest payments due, in return for commitments by Malaysia to acknowledge its liabilities and make payments.
Last month’s filing put the amount owed at just over $1.2bn plus accrued interest.
The claim filed with the London Court of International Arbitration implies the two parties have failed to reach a negotiated settlement.
The LCIA process is normally a lengthy one that can take years, followed by a further lengthy process to recover assets, often via multiple jurisdictions, if a negotiated settlement still cannot be reached.
The dispute between Ipic and Malaysia is further complicated by investigations into 1MDB in at least seven jurisdictions, including its home country, Switzerland and the United States.
In April, Ipic said that payments which 1MDB claims were made as part of last year’s deal were never received and that it had no association with an entity called Aabar BVI (British Virgin Islands), where the money was allegedly sent.
Mr Najib has publicly denied claims that nearly $700m of 1MDB funds meant for Ipic was siphoned into accounts he controlled.
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Updated: June 14, 2016 04:00 AM