KUALA LUMPUR: Abu Dhabi’s International Petroleum Invest­ment Co (IPIC) and its unit Aabar Investments PJS have agreed to pay $1.8 billion to settle a legal dispute over the scandal at Malaysian state fund 1Malaysia Development Berhad (1MDB), Malaysia’s finance ministry said on Monday.

Malaysia in 2018 had filed a challenge in a London court against a settlement agreement between 1MDB and IPIC that had been negotiated a year earlier during the premiership of former Malaysian prime minister Najib Razak.

Najib was sentenced to 12 years in jail last year after being found guilty in a 1MDB-related corruption case.

According to Bloomberg, the Federal Court is currently hearing Najib review bid to overturn his conviction. Najib has applied for a royal pardon, but remains on trial in four other cases, each carrying prison terms and hefty financial penalties.

In its challenge, Malaysia had argued that the 2017 settlement was procured by fraud.

Former PM Najib Razak and two UAE executives have been convicted and jailed for their role in the case

The finance ministry said on Monday the Abu Dhabi companies, 1MDB and Malaysia’s Minister of Finance (Incorporated) had reached a settlement in respect of proceedings in the London Court of International Arbitration and the London High Court.

“With this settlement, Malaysia and Abu Dhabi look forward to continue working together for the prosperity and economic benefit of both countries in the future,” the ministry said in a statement.

Clifford Chance LLP, a London-based law firm for IPIC and Aabar, in a statement said the firms had agreed to pay the settlement figure in three phases: $800 million within seven days from the end of the London proceedings, and the remainder within two years of the termination.

The settlement draws a line under a longstanding dispute launched five years ago by Malaysia over 1MDB, Financial Times reported. The scandal has been an embarrassment for Abu Dhabi, which in 2016 announced that IPIC and Aabar would be folded into Mubadala, another state investment firm.

Khadem al-Qubaisi and Mohammed al-Husseiny, two senior executives at IPIC and Aabar, have been convicted and jailed in Abu Dhabi for their role in the fraud.

Malaysia’s 1MDB is the subject of corruption and money-laundering investigations in at least six countries.

An estimated $4.5 billion was misappropriated from 1MDB by high-level officials of the fund and their associates between 2009 and 2014, the US Justice Department has alleged.

Published in Dawn, February 28th, 2023