LONDON NOOSE TIGHTENS ON NAJIB’S NECK AS U.S. DOJ CONFIRMS 1MDB SETTLEMENT BASED ON SHAM TRANSACTION: ALL EYES ON LONDON BOURSE TO SUSPEND TRADING IN IPIC GMT NOTES

The US Department Of Justice has just  filed a further complaint in its ongoing action to recover funds stolen from 1Malaysia Development Bhd, which includes the following statements of fact:

443. The purpose of this unnecessarily complicated funds flow was to create the appearance that fund units in the Brazen Sky Account were being redeemed for cash and being paid forward to 1MDB, thereby fraudulently disguising the fact that the fund units were illiquid and relatively worthless

444. The pattern of fund flows described above was largely repeated with the second tranche of loan proceeds that was sent to Aabar-Seychelles at the end of September 2014. This time, however, the fund flows exhibited one notable difference. As explained below, the majority of the funds that transited through the Brazen Sky Account were returned to Aabar-Seychelles rather than being retained by 1MDB. This allowed the funds to be recycled again and again through the same circle of entities, thereby creating the appearance of multiple “redemptions” using the same pool of money

Despite that, IPIC has managed to find a buyer for the “units” who has agreed to pay USD 2.43 BILLION.As previously reported :

……, Abu Dhabi arranged for an undisclosed entity domiciled in the Seychelles to buy the units from 1MDB at the guaranteed value, to be settled by deferred payments from this month to October 2022, said a senior financial executive familiar with the matter.

The London Stock Exchange ought to have suspended trading in IPIC GMT Notes when the above was first reported in April this year. Now its wilful negligence has been exposed by the US DOJ.
END

Reference 

Friday, April 28, 2017

LCIA IPIC-1MDB consent award further complicated by revelation that IPIC is directly involved in a sham transaction,not disclosed to holders of its debt securities

 by Ganesh Sahathevan
 
According to senior financial and legal executives, the main hurdle was fund units amounting to US$2.43 billion (S$3.4 billion) held by two 1MDB subsidiaries, Brazen Sky and 1MDB Global Investments, that were guaranteed by IPIC subsidiary Aabar Investments PJS. Aabar had disputed the guarantee.
To overcome the hurdle, 1MDB agreed to waive its right to claim from Aabar the US$2.43 billion guarantee. In return, Abu Dhabi arranged for an undisclosed entity domiciled in the Seychelles to buy the units from 1MDB at the guaranteed value, to be settled by deferred payments from this month to October 2022, said a senior financial executive familiar with the matter.
 
The transaction highlighted above implies that IPIC is  involved in a round robin transaction where it is in effect paying itself. Worse, the transaction will be booked at the guaranteed value , even after the guarantee is waived. This is clearly a sham transaction.
This new Straits Times revelation adds to the issues of illegality that taint the IPIC-1MDB settlement (see story below),and in fact shows IPIC itself to be directly involved in a new transaction in which the implication of money laundering is hard to avoid.
In addition , given IPIC’s   reporting obligations to the London Stock Exchange and its own bondholders pursuant to its GMTN debt programme, the ST story shows IPIC to be guilty of concealing material information from the market.
The London Court Of International Arbitration (LCIA) is being asked to hand down a consent award that will encompass this and all the other transactions currently under investigation by the US Department Of Justice and the FBI, who  the Malaysian Government has made no secret they expect will be defeated by the LCIA consent award.

The likelihood that the consent award will be denied to illegality gets ever more likely.

– http://realpolitikasia.blogspot.my

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