PAID. 1Malaysia Development Bhd (1MDB) yesterday wired US$350 million (RM1.5 billion) in the first tranche of a debt repayment scheme to Abu Dhabi’s International Petroleum Investment Co (IPIC), said banking sources.
The debt-laden Malaysian state investor was given an extra week until tomorrowto pay US$310 million after it missed the original July 31 deadline and a five-day extension after that.
“IPIC received US$350 million instead of US$310 million and got it early, ie. today Thursday, instead of the Saturday due date for the first tranche,” a banker source told The Malaysian Insight early this morning.
The Malaysian Insight understands the money to IPIC was wired from 1MDB’s account in Malayan Banking Berhad (MBB), Malaysia’s largest banking group.
The payment came a day after high-level Chinese delegation visited Malaysia for the groundbreaking ceremony of the multi-billion ringgit East Coast Rail Link (ECRL) – a signature project under China’s One Belt One Road (OBOR) programme.
Treasury secretary-general and 1MDB chairman Irwan Siregar Abdullah revealed on Tuesday that IPIC had extended the deadline to end of August if 1MDB could pay US$310 million by August 12 after the state investor missed the July 31 deadline set in an April settlement with IPIC.
It is understood the Abu Dhabi government was incredulous at the cavalier manner Putrajaya handled it’s debt obligation and is puzzled why it has taken the Malaysian government so long to handle the transfer of funds.
RELATED STORY: Perkasa slams ECRL ceremony as being ‘too Chinese‘
Prime Minister Najib Razak blamed 1MDB’s failure to pay Abu Dhabi’s sovereign wealth fund the US$600 million due on July 31 on “technical” issues, saying it was not because 1MDB had no money.
“Regarding 1MDB (and its failure to repay IPIC), we have released a statement that it was due merely to a technical issue, and not because we are not able to pay back,” Najib told Parliament on August 2.
IPIC subsequently gave 1MDB five days to make payment or become subject to additional obligations.
Sources told The Malaysian Insight that the delay was not technical, and was in fact embarrassing because local and international banks do not want to handle transactions with the prefix 1MDB.
1MDB has had difficulty transferring funds from overseas accounts with even Malaysian banks being wary of entering any transactions, one source told The Malaysian Insight.
The sum owing is the first of two payments amounting to US$1.2 billion due to IPIC before the end of the year, according to the terms of the private arbitration in April in London.
Under the deal, 1MDB and the Finance Ministry also assumed responsibility for all future interest and principal payments under two bonds, worth US$3.5 billion in total.