KUALA LUMPUR, May 24 – The previous government under Prime Minister Datuk Seri Najib Abdul Razak used money raised from a deal with Khazanah Nasional Berhad to pay for some of the liabilities of state fund 1Malaysia Development Berhad (1MDB), two sources told Reuters.

Khazanah paid the government RM1.2 billion in mid-2017 in exchange for redeemable shares that the finance ministry owned, the sources said, adding that the funds were used to pay some of 1MDB’s dues to Abu Dhabi fund IPIC. 1MDB had agreed to pay US$1.2 billion (RM4.8 billion) to IPIC as part of a settlement agreement reached in April 2017 after 1MDB defaulted on its bonds.

The finance ministry did not immediately respond to requests for comment. Khazanah told Reuters in an e-mail that the ministry of finance exercised its right in August 2017 to redeem outstanding Redeemable Convertible Cumulative Preference Shares amounting to RM1.2 billion, which were issued to the ministry in 2011. However, it did not comment on whether the funds were used for repaying 1MDB’s dues. — Reuters

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