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1MDB corrects Tony Pua’s misleading statement on its deal with IPIC

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Nikita Nawawi
Written by Nikita Nawawi

KUALA LUMPUR – June 29, 2015: 1Malaysia Development Berhad (1MDB) today corrected a misleading statement by DAP lawmaker Tony Pua regarding the company’s deal with Abu Dhabi-based International Petroleum Investment Company (IPIC).

1MDB in a press statement clarified that neither the Finance Ministry nor the government has provided guarantees for the commercial transaction between 1MDB and IPIC as stated by Pua.

“It is publicly known that in 2012, IPIC had issued guarantees for the payment of interest and principal on two US$1.75 billion bonds issued by 1MDB, totalling US$3.5 billion of principal and up to US$2 billion of interest. The government has not guaranteed either of these bonds.

“It is irresponsible of Pua to suggest that the recent binding term sheet between 1MDB and IPIC has resulted in further guarantee obligations by the Malaysian government.

“It is public information that the government has only issued a ‘letter of support’ and this was for a different US$3.0 billion (RM11.35 billion) bond issued by 1MDB. In total, the government has only provided explicit guarantees for RM5.8 billion of 1MDB debt,” the statement read.

1MDB had also addressed Pua’s deliberate misleading action as he failed to mention the crucial ‘and vice versa’ clause in relation to the ‘indemnity’, i.e. the indemnity applies both ways – to IPIC as well as 1MDB – in relation to performance of obligations by the parties.

“Such a two-way indemnity is a standard clause in commercial transactions to ensure neither party is ‘out of pocket’ for non-performance by the other.

“1MDB confirms that it fully intends to perform its obligations under the binding term sheet,” said the company.

The statement further read that the binding term sheet executed with IPIC is a key component of the 1MDB rationalisation plan as announced by the Finance Ministry on May 29.

The success of this approach is said to have been evidenced by the recent repayment of a RM3.6 billion loan by 1MDB.

“Commercial negotiations are ongoing between 1MDB and IPIC to reach a definitive agreement, which will ultimately result in a reduction of approximately RM16 billion of 1MDB debt.

“1MDB fully intends to share further information once a final agreement is reached between the parties,” it added.

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About the author

Nikita Nawawi

Nikita Nawawi

Nikita Nawawi is an up-and-coming writer who started his involvement in the media industry serving established local English daily, before joining The Mole in October 2014 as journalist.