Date
13 December 2017
The fund, 1Malaysia Development Bhd., was set up six years ago by Prime Minister Najib Razak to develop new industries. Photo: Bloomberg
The fund, 1Malaysia Development Bhd., was set up six years ago by Prime Minister Najib Razak to develop new industries. Photo: Bloomberg

Malaysia fund scandal spreads to UAE

The corruption scandal involving an economic development fund in Malaysia is spilling beyond the country’s borders as officials at a United Arab Emirates state investment vehicle raise questions about missing funds.

Backers of the fund in Abu Dhabi are asking what happened to a US$1.4 billion payment the fund said it made but which they never received, the Wall Street Journal reported, citing people familiar with the matter.

The fund, 1Malaysia Development Bhd., was set up six years ago by Malaysian Prime Minister Najib Razak to develop new industries in the Southeast Asian country, and Abu Dhabi was among its major supporters.

Malaysian investigators are examining the transfer of hundreds of millions of dollars into the prime minister’s alleged private bank accounts through entities linked to 1MDB.

The scandal has sparked a political crisis in Malaysia, damaging confidence in the country’s economy, the newspaper said.

Najib has denied wrongdoing, noting that he didn’t take money for personal gain.

The UAE is trying to sever its ties to the fund and restructure the entity that provided it with financial support, the sources said.

The disputed payments are related to the purchase of power plants around the world by the Malaysian fund in 2012.

A state investment fund in Abu Dhabi, the International Petroleum Investment Co., or IPIC, guaranteed the US$3.5 billion in bonds that 1MDB issued to finance the purchase, the Journal said.

According to 1MDB’s financial statements, the Malaysian fund made a collateral payment of US$1.4 billion.

However, IPIC’s consolidated financial statements contain no reference to the receipt of the payment, the report said.

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RA/CG

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