Malaysia paying Abu Dhabi US$1.2 billion in 1MDB saga

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As part of the 1MDB debacle, the Malaysian government has finally decided to pay Abu Dhabi $1.2 billion before the end of this year as part of a partial debt settlement, reported the Straits Times.

The Malaysian government is also negotiating on a further $3.5 billion – an engagement made by the embattled government fund 1Malaysia Development Bhd.

The deal could be signed as soon as Friday.

According to the Straits Times, the $1.2 billion settlement involves the repayment of a loan plus accumulated interest from a bailout that 1MDB received from Abu Dhabi’s International Petroleum Investment Co. in July 2015. It will largely be funded by the sale of “fund units” from 1MDB unit Brazen Sky to an undisclosed buyer, the paper said.

The countries agreed to negotiate on another dispute over roughly $3.5 billion with the aim of concluding an agreement before December 2020. During that time, neither side would pursue legal action, the paper said.

The disputes ‎between IPIC and 1MDB centred on 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 any transfers, declaring 1MDB in default later after the latter refused to honour an interest instalment of US$50.3 million.

Settling the IPIC matter may also dilute the US Department of Justice investigation on 1MDB, some sources said.