Two Gold Coast men involved in a funds management business linked to Malaysia’s 1MDB scandal are to be banned from corporate life for a decade over their mismanagement of Australian investors’ money.

Federal Court judge Jonathan Beach yesterday said he would make orders banning Paul Rowles and Clayton Dempsey from running companies or offering financial services when he hands down a full judgment at a later date.

Mr Rowles is listed in court documents as a director of a mysterious Cayman Islands entity at the centre of the 1MDB scandal, Bridge Global Absolute Return Fund.

1MDB, Malaysia’s sovereign wealth fund, previously claimed $US2.3 billion of promissory notes connected to its investment in an oil joint venture, PetroSaudi, were stashed with BGARF.

However, as part of an investigation into the alleged looting of 1MDB by associates of Malaysian Prime Minister Najib Razak, the US Department of Justice claims the $US1bn 1MDB invested in the PetroSaudi JV was instead diverted to bank accounts controlled by scam mastermind Jho Low.

The fate of the BGARF money is crucial because 1MDB appears to be relying on the funds to repay Abu Dhabi over a separate ­alleged fraud.

This week, 1MDB settled a stoush with Abu Dhabi’s Inter­national Petroleum Investment Company over a guarantee IPIC gave of $US3.5bn in 1MDB bonds, the proceeds of which were allegedly also looted.

IPIC said 1MDB would pay it $US1.2bn by the end of the year and assume all responsibility for the bonds.

1MDB said the money would come “primarily via monetisation of 1MDB-owned investment fund units” — believed to be a reference to BGARF.

Mr Razak’s ruling UMNO party is desperate to spin the IPIC agreement as a win in the lead-up to expected early general elections later this year, with its supreme council insisting the agreement “weakened the US Department of Justice civil claims that 1MDB’s funds were stolen”.

Yet the deal has sparked ­awkward questions over why ­Malaysia should repay Abu Dhabi if it has already been paid, as the government has consistently claimed even as it refuses to provide documentary evidence.

The country’s largest Islamic Party, PAS, has called for the declassification of the auditor-­general’s report on 1MDB, currently sealed under the Official Secrets Act, with the party’s deputy chief also questioning how the settlement could benefit Malaysia.

At stake in the Australian court case was the far smaller sum of about $18.5 million, punted by Australian investors with Mr Rowles and Mr Dempsey through local and Cayman Islands funds run by the pair’s Gold Coast-based company Avestra Asset Management.

While BGARF and another figure in the 1MDB investigation, Singaporean insurance broker Samuel Goh Sze Wei, are mentioned in ASIC’s filings with the court, the fate of 1MDB’s supposed investment has not figured in the proceedings. Both Mr Rowles and Mr Dempsey agreed to the 10-year bans.

The Australian