Saturday, April 22, 2017

In July 2016 IPIC denied ever guaranteeing "fund units" which are central to its settlement with 1MDB:Units worthless without the guarantee


Singapore's Straits Times reported this morning that Malaysia and Abu Dhabi had "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."

The paper also reported:
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 above is clearly inconsistent with this report by Bloomberg:
ABU DHABI • A sovereign fund in Abu Dhabi embroiled in a debt dispute with 1Malaysia Development Bhd (1MDB) has said it did not guarantee any of the Malaysian state company's holdings in a Cayman fund, stirring up more questions on investments that amounted to billions of dollars.
International Petroleum Investment Co (Ipic) is also investigating companies set up outside its group structure and in other jurisdictions that used variations of the name of its Aabar Investments PJS unit, it said in an exchange filing on Thursday. It had earlier denied ownership of a company known as Aabar BVI, to which 1MDB said it sent US$3.5 billion (S$4.7 billion).
Ipic did not say if the other entities using Aabar's name were also related to 1MDB.
1MDB is at the centre of probes at home and abroad, including in Switzerland, the United States and Singapore as the authorities seek to determine if some of the billions of dollars it raised were siphoned off. While it has denied wrongdoing, a report by a Malaysian parliamentary committee in April identified at least US$4.2 billion of questionable transactions, including those involving Abu Dhabi companies.
Investigators are faced with a complex web of transactions, some of which involve companies with similar names.
1MDB has "intimated the existence of guarantees" of about US$940 million provided by Aabar for units in a Cayman-registered fund owned by 1MDB unit Brazen Sky, and guarantees from Aabar BVI of investments held with various third-party fund managers of about US$1.5 billion, Ipic said in a statement on Thursday. 
In September 2012, 1MDB sold its shares in a venture for US$2.32 billion and received units in a Cayman-registered fund managed by Bridge Partners, a Hong Kong- based fund manager.
1MDB said the units were owned by Brazen Sky, and held through Swiss bank BSI's unit in Singapore as custodian. Transcripts of a parliamentary committee probe of 1MDB show lawmakers were told by its auditor of an investment guarantee by Aabar.
"Both Ipic and Aabar confirm there is no record of any such guarantees being provided by Aabar," Ipic said. "Neither Ipic nor Aabar has received any payments, assets or fund units from Brazen Sky."
1MDB declined to comment on the Ipic statement. It has said it negotiated "various legal agreements" with the previous heads of Ipic and Aabar, and called it a "surprising claim" that neither Gulf company knew of its dealings with Aabar .
Ipic entered into an agreement with 1MDB in 2015 to provide the Malaysian fund with US$1 billion to settle liabilities in exchange for a transfer of assets, and assume interest obligations on US$3.5 billion of debt. The tussle between the two spilled over to repayments on bonds issued by 1MDB, which led to a default in April.
A version of this article appeared in the print edition of The Straits Times on July 02, 2016, with the headline 'Ipic denies guaranteeing 1MDB's Cayman investments'. Print Edition | Subscribe

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