Minister says letter confirms Aabar BVI is IPIC subsidiary

EXCLUSIVE | Finance Minister II Johari Abdul Ghani has disclosed the existence of a letter confirming that Aabar Investments PJS Ltd (BVI) is a subsidiary of International Petroleum Investment Company (IPIC) even though the Abu Dhabi firm denies this.

"As far as I am concerned, based on records provided by 1MDB to the Public Accounts Committee (PAC) prior to the settlement agreement, Aabar Investments PJS Ltd (BVI) is a subsidiary of IPIC.

"A fact which was confirmed by the Registrar of Corporate Affairs of the British Virgin Islands by its letter dated Aug 11, 2016," he told Malaysiakini.

Johari, who is overseeing the 1MDB rationalisation plan, said it was on this basis that the Finance Ministry had decided to go ahead with the arbitration proceedings.

The minister's disclosure led a source familiar with the issue to question why the Malaysian team chose to opt for a settlement, when it had such strong evidence.

This, claimed the source, suggested that IPIC might have its own leverage.

Going for arbitration and dragging the issue, the source added, might prompt IPIC to look into the final destination of the funds after being transferred to Aabar BVI.

This could implicate key personalities including on the Malaysian side.

Johari, had in August last year, expressed confidence that 1MDB could win its arbitration dispute against IPIC.

"I am very confident we will win based on the documents that I have, supplied by 1MDB to me," Johari had said, but did not reveal what the document was at that time.

Between 2012 and 2014, 1MDB had made various payments totalling US$3.51 billion to Aabar Investments PJS Ltd (BVI) (Aabar BVI), which carried a similar name to IPIC's widely known subsidiary Aabar Investment PJS (Aabar).

The actual ownership of Aabar BVI has not been properly ascertained apart from IPIC denying that it is related to the group.

The directors of Aabar BVI, Kadem Abdullah al-Qubaisi and Mohamad Ahmed Badawi Al-Husseiny, happen to also be office bearers of the legitimate Aabar but were subsequently sacked after apparently going rogue.

It is unclear whether the duo had abused their authority to register Aabar BVI under IPIC's name.

Malaysia, going into the arbitration, had argued that Aabar BVI was indeed a subsidiary of IPIC which received US$3.51 billion and therefore this should cover part of IPIC's US$6.5 billion claim against 1MDB.

IPIC's claim had included US$3.5 billion principal payment on two bonds and US$1.3 billion in future interest, which it had guaranteed for 1MDB, on the assumption that the Malaysian fund planned to default, on top of another US$481 million in option termination payment and a US$1.2 billion loan plus interest.

Malaysian team appears to have backtracked

The Malaysian team involved in the settlement appeared to have backtracked from the plan to use the payments to Aabar BVI - if it really did belong to IPIC - as a quid pro quo against IPIC's claim.

Instead, IPIC in an announcement to the London Stock Exchange, indicated that the payments to Aabar BVI would be discussed further, albeit already securing concessions from 1MDB.

This was based on the wording of the announcement which stated: "The parties have also agreed to enter into good faith discussions in relation to payments made by 1MDB Group to certain entities".

Malaysiakini understands that the decision to go for settlement instead of letting the arbitration process run its course was only made recently.

Johari, who has been a proponent of arbitration, appears to have distanced himself from the sudden change in decision.

"As I have informed previously, I was not involved in the negotiation process between IPIC, 1MDB and the Prime Minister's Office (PMO) on the recent settlement with IPIC, as such, I could not offer any further information," he said.

Despite this, Johari has become a target for criticism due to his public role in being the government spokesperson on the 1MDB rationalisation plan.

Among those who had criticised Johari was Petaling Jaya Utara MP Tony Pua, who question what had become of Johari's confidence Malaysia could win in the arbitration, as well as what would happen to the RM3.51 billion paid to Aabar BVI.

Responding to this, Johari said: "Pua's demand for an explanation from me regarding the reason and rationale for the settlement negotiations, I think that it would be best Pua, as a member of the Public Accounts Committee, to direct his questions to either 1MDB's board and management or the PMO".

"I will only reply to questions from him if I have the facts," he added.

Singapore's Straits Times previously named the PMO's economic division director Amhari Efendi Nazaruddin as a key figure of the settlement option.

It is unclear if Amhari was a key figure in charting the negotiations or was merely acting as an intermediary for Prime Minister Najib Abdul Razak, who is also the finance minister.

When contacted about his role, Amhari merely directed queries to the prime minister's press secretary Tengku Shariffuddin Shah Tengku Sulaiman.

"I am not entitled to respond," he told Malaysiakini.

Tengku Shariffuddin did not respond to Malaysiakini's attempts to contact him.

Other key 1MDB figures in the negotiations are 1MDB chairperson Mohd Irwan Serigar Abdullah, who is also the Treasury secretary-general, and 1MDB group chief executive officer Arul Kanda Kandasamy.

The duo have also not responded to Malaysiakini's request for comment.

Carefully-worded statements

The government and 1MDB have so far stuck with the carefully worded statements issued shortly after the settlement was announced on Monday.

1MDB in a statement said the arbitration settlement represented the "resolution of a significant challenge" and that it was now at the "final stages of conclusion".

Meanwhile, Tengku Shariffuddin in his statement had hailed the positive progress which he said was "nearing the completion of the rationalisation programme".

None of the statements touched on what would happen to the US$3.51 billion that was paid to Aabar BVI, which remains unaccounted for.

According to the US Department of Justice (DOJ), Aabar BVI was use as a conduit for the diversion of 1MDB funds.

Around US$1.367 billion of the US$3.51 billion paid to Aabar BVI was addressed in the DOJ suit, which said the money, after passing through intermediaries, ended up with officials of Aabar and 1MDB.

It said other beneficiaries included Red Granite Pictures, a company belonging to Riza Shahriz Abdul Aziz, the step-son of Najib as well as one "Malaysian Official 1" (MO1).

Minister in the Prime Minister's Department Abdul Rahman Dahlan had confirmed that MO1 was Najib.

Najib has denied any wrongdoing or taking public funds for personal gain.

While the DOJ probe suggested that the funds sent to Aabar BVI was subsequently misappropriated, 1MDB had insisted that as far as it was concerned, the money had been paid.- Mkini