China firms rescue 1MDB from massive debt
BANGKOK (ANN Desk) – Chinese state-owned firms help bail out Malaysia’s scandal-hit development fund: report
The Malaysian government’s scandal-hit 1MDB development fund sold assets to Chinese companies in order to repay a US$602.7 million debt to Abu Dhabi’s International Petroleum Investment Company (IPIC), according to Singapore’s Straits Times.
China’s interest in 1MDB comes as no surprise. A year ago, the Financial Times reported that China and Malaysia were in talks to rescue 1MDB, which is at the centre of official investigations in several countries including the US over accusations that Malaysia’s Prime Minister Najib Razak channelled over 2.67 billion ringgit (nearly US$700 million) from 1MDB into his personal bank accounts.
Najib is acknowledged to be “Malaysian Official 1” named in the US Department of Justice lawsuit to seize assets it says were bought with more than $3.5 billion stolen from 1MDB.
Straits Times reports that 1MDB repaid the loan last Friday by selling stakes in two 1MDB-related entities that held land in northern Penang and around Port Klang.
“Malaysian government officials declined to identify the buyers in the real estate transactions but one financial executive close to the situation said that the equity interests in the 1MDB real estate entities were acquired by ‘concerns ultimately controlled by Chinese state-owned enterprises’.
“The executive declined to elaborate,” read the report.
1MDB said it acquired 234 acres of land in prime land in Ayer Itam, Penang for RM1.38 billion in 2013, Malyasiakini reports.
Over in Selangor, 1MDB acquired a 310-acre piece of land near in Pulau Indah near the Port Klang Free Zone in 2014.
Previously, 1MDB had cited plans to develop the two parcels of land, but the plans fell apart thanks to massive cash-flow problems after the fund ran up RM42 billion ($11.73 billion) of debts.
China already has a substantial stake in 1MDB-linked asset Edra Global Energy and is eyeing projects in the formerly 1MDB-owned Bandar Malaysia, reports Malaysiakini.
The 1MDB development fund was established in 2009, soon after Najib took office.