- 1MDB says it has proof of disputed entity's ownership
- Malaysia fund is focus of probes for alleged money laundering
An Abu Dhabi sovereign wealth fund denied ownership of a company that received $3.5 billion from 1Malaysia Development Bhd., adding to questions from Malaysian investigators about the state fund’s murky financial dealings.
International Petroleum Investment Co. and unit Aabar Investments PJS said they have no subsidiaries known as Aabar Investments PJS Limited or Aabar BVI, according to a stock exchange filing on Monday.
The Malaysian fund responded to say it negotiated "various legal agreements" with the previous heads of IPIC and Aabar and called it a "surprising claim" that neither of the Gulf companies knew of payments to Aabar BVI.
The conflicting statements come as authorities from the U.S. to Switzerland seek to determine if some of the billions of dollars that 1MDB raised were siphoned out inappropriately. 1MDB amassed more than 50 billion ringgit ($12.8 billion) of debt over six years, using some of it to buy energy assets, including joint ventures with companies in Saudi Arabia and Abu Dhabi.
1MDB’s advisory board is headed by Prime Minister Najib Razak and the probes into its finances have entangled the premier, leading to calls from opposition politicians for his resignation. The denial from IPIC may sow further doubt about Najib’s ability to lay to rest the various investigations into both 1MDB and a separate large political donation from Saudi Arabia to his personal bank accounts in 2013.
A report by a Malaysian parliamentary committee last week identified at least $4.2 billion of questionable transactions including those that involved the Abu Dhabi companies. The bipartisan group said it couldn’t verify a $2.1 billion payment to Aabar Investments PJS Ltd., while another $1.37 billion was sent to the company without the approval of 1MDB’s board.
The committee said it couldn’t be sure if Aabar Investments PJS Ltd. was part of Abu Dhabi’s IPIC and Aabar. It had asked 1MDB for proof and was shown a Certificate of Incumbency issued by a Hong Kong company that stated Aabar Ltd. was a unit of IPIC. The Hong Kong company was an agent which provides services to register a company in the British Virgin Islands, the committee’s report said.
"Both IPIC and Aabar confirm that neither has received any payments from Aabar BVI nor has IPIC or Aabar assumed any liabilities on behalf of Aabar BVI," it said.
1MDB said in a statement that it had documentary evidence of the ownership of Aabar BVI. It didn’t include the papers in its statement. It referred to legal agreements negotiated with Khadem Al Qubaisi, then managing director of IPIC and chairman of Aabar, and with Mohamed Badawy Al Husseiny as chief executive officer of Aabar.
The two former executives have been issued travel bans and had their personal assets frozen, the Wall Street Journal reported this month, citing people it didn’t identify. Al Qubaisi could not be reached for comment by Bloomberg at that time while Al Husseiny declined to comment.