M’sian govt applies for permission to appeal London Commercial Court decision

(The Star) – The Malaysian government has filed an application for permission to appeal against the London Commercial Court’s decision to delay its legal challenge, seeking to nullify a consent award involving 1MDB, Minister of Financed Incorporated (Mofi) and two Abu Dhabi-based companies.

Attorney General Tommy Thomas said the Commercial Court wanted ongoing parallel arbitration proceedings between the companies involved to be resolved first.

“The related arbitration proceedings will now move forward in London, but under the Court’s supervision.

“Needless to say, the London Court decision, which allows for the issue of massive fraud that is of public importance to be first determined behind closed door private arbitration proceedings without public scrutiny, is not satisfactory to Malaysia.

Thomas said the proceedings were steps to recover a substantial amount of money wrongfully paid by the Najib’s administration.

“As shown by the realisation of assets in the recent recovery exercises, the Government’s effort in seeking justice for the Malaysian people following what has been described as ‘kleptocracy at its worst’ is bearing fruit.

“The government remains single-mindedly focused in its attempts to ensure that Malaysia’s assets are recovered,” Thomas added.

He said 1MDB and Mofi had filed an application in the Commercial Court in London, United Kingdom, in October last year to challenge a consent award that the two Malaysian parties had recorded under the previous Najib administration in May 2017 with International Petroleum Investment Company (Ipic) and Aaabar Investments PJS (Aabar).

“The consent award was to conclude the arbitration proceedings between Ipic and Aabar and the two Malaysian parties before the London Court of International Arbitration (LCIA) tribunal in 2016.

“Our challenge is brought on the grounds, amongst others, of fraud and public policy.

“In response, IPIC and Aabar applied to strike out or stay this application by 1MDB and Mofi, and commenced separate arbitration proceedings against 1MDB and Mofi,” he said.

Thomas said under the consent award, Malaysia was obliged to pay US$5.78bil (RM24.3bil) to Ipic and the bond trustee over a five-year period.

“This is because Malaysia is obliged, among others, to take full responsibility for all interest and principal payments under two bonds issued by 1MDB in 2012 that Ipic jointly guaranteed.

“As of May 2019, US$1.6bil (RM6.7bil) has been paid, leaving a balance of US$4.16bil (RM$17.5bil).

“The US$4.6bil represents the remaining interest and the principal payable to the bond trustee for the 2012 bonds,” he said.

He also noted that if Malaysia succeeds in the UK action, Malaysia will be able to proceed to seek the recovery of US$3.5bil (RM14.7bil) that was paid by 1DMB subsidiaries to an Ipic subsidiary, or in the alternative, reduce Malaysia’s liability to pay interest and principal under the 2012 bonds that were jointly guaranteed by Ipic up to US$3.5bil.

“Briefly, the allegations before the London Commercial Court are that the settlement deeds and the consent award were engineered by (former prime minister) Datuk Seri Najib Razak as part of a conspiracy to defraud, and that IPIC and Aabar knew that Najib was acting contrary to the interests of Mofi and 1MDB,” he said.

Thomas said the London Commercial Court rejected IPIC and Aabar’s attempt to strike out the application made by 1MDB and Mofi to challenge the consent award entered into by the Najib’s administration.

“The High Court also rejected the application by Ipic and Aabar under Section 9 of the UK Arbitration Act 1996 to stay 1MDB and Mofi’s application, pending determination of parallel arbitration proceeding.”