Monday, April 18, 2016

1MDB Default

Sometimes, you just have to give it to Malaysian Prime Minister Najib Razak. He just can't catch a break. He had done everything, and I do mean everything, he can to stay in power but the hits just keep on coming. The saga of scandal-ridden Malaysian investment fund 1MDB just refuses to go away for the man.

With all the moving parts of 1MDB, here now comes another one. 1MDB is accused of being in default. Worse, they are accused of being in default to the tune of $1.1 billion!

Under a 2012 agreement, a government-backed investment fund in the United Arab Emirates, Petroleum Investment Company (IPIC), guaranteed 1MDB bonds hich were then valued at US$3.5 billion. In return, 1MDB agreed to make payments as collateral to IPIC's subsidiary Aabar.

Then in May 2015, IPIC agreed to provide US$1 billion in cash as well as assume US$3.5 billion of 1MDB debt in exchange for assets which have not been named. The UAE fund was also to forgive an undisclosed amount of debt owed to IPIC by 1MDB. IPIC now claims that the Malaysians has failed obligations including the repayment of just over $1.1 billion plus interest under terms drawn up in that agreement in May 2015.

1MDB had challenged IPIC's position by claiming they had made payment as stated in the agreement. Problem for 1MDB is that no one seems to be able to prove 1MDB's position that the payment had been made. 1MDB says the payment was made to a company in the British Virgin Islands, Aabar Investments PJS Ltd. IPIC says that company does not belong to them and well...all the paperwork shows that they are right. Aabar Investments PJS Ltd does not belong to IPIC. So if 1MDB had been paying; who the hell have they been paying to? Are they lying that they had been paying or have 1MDB been tricked?

Either way, it doesn't look good for Najib. So you have to feel for the man. All his work to stay in power could now go to waste. And you know what's the worst thing about it all? No one will be feeling sorry for him.

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