MALAYSIA is not beholden to anyone in the settlement of 1Malaysia Development Bhd’s debt to an Abu Dhabi state fund, said Second Finance Minister Johari Abdul Ghani today.

He was asked to comment on a report by the Straits Times that 1MDB paid the second instalment of its debt to International Petroleum Investment Company (IPIC) by divesting its stakes in two assets to China-backed companies.

“We are not beholden to anyone,” Johari told reporters after an event at the Finance Ministry complex in Putrajaya.

He said he did not have more details on the settlement and declined to comment further, suggesting that the media seek clarificatio from Treasury Secretary-General Mohd Irwan Serigar Abdullah, who is also 1MDB chairman.

“I don’t know the detailed information… can you ask Irwan? Because he is chairman of 1MDB.”

Last week, The Malaysian Insight reported that 1MDB had paid US$630 million – the balance of its US$1.2 billion (RM4.9 billion) debt – to IPIC ahead of the December 31 due date.

The settlement was confirmed by IPIC to the London Stock Exchange.

The Straits Times report said the second instalment was paid with funds from the sale of 1MDB’s stakes in two entities that owned land in Penang and near Port Klang in Selangor.

The report, citing sources, said the buyers were said to be companies “controlled by Chinese state-owned enterprises”.

In 2012, 1MDB guaranteed two bonds worth US$1.75 billion each for the Malaysian state investment firm to raise funds to buy power-generation assets.

In return, 1MDB was to make collateral payments to IPIC.

Problems arose at the end of 2015 when IPIC and 1MDB could not agree over a sum of missing funds that the Malaysian company owed to the Abu Dhabi fund.

1MDB settled the first tranche of its debt instalment in August.

Reports that 1MDB repaid its debt by disposing of its stakes in assets to China-backed companies also drew criticism from the National Patriots’ Association.

Its president, Mohamed Arshad Rabi, said the government should answer for the sale of prime land and national assets. 

“If it is confirmed, it is necessary to state whether the land (parcel) or asset of the country is sold through local proxy, and who they are,” he said in a statement today.

The association also called for a special committee that included the Bank Negara governor, leading economists and politicians from both sides of the divide to handle negotiations between 1MDB and Abu Dhabi over the US$3.5 billion that remains outstanding.

“The decision to settle this overseas debt cannot be handed over to our government alone, as it has proven to have a ‘trust-deficit syndrome’.”

This sum involves the cash advances 1MDB said it paid IPIC, which claimed it never received the funds. The Straits Times reports that negotiations are to begin next month, now that 1MDB had settled its loan repayment. – December 29, 2017.