Malaysia said it has entered mediation talks with Julius Baer Group Ltd in a bid to settle a US$112 million (RM462.84 million) lawsuit filed against the Swiss bank by a unit of 1MDB.
SRC International (Malaysia) Ltd sued the Zurich-based private bank in 2021, claiming a breach of fiduciary duty for its role in the scandal, according to a filing with a Hong Kong court.
“Mediation is ongoing,”’ 1MDB’s asset recovery task force chairman, Johari Ghani, told Bloomberg on Thursday in response to questions.
Baer declined to comment when asked whether it is participating in mediation talks. The firm stands by a statement in its first-half earnings report that it is contesting the claim, “while taking appropriate measures to defend its interests”, a spokesman said.
1MDB collapsed in 2016, spawning multiple lawsuits against banks across Asia, Europe and the US.
It was originally intended as a development fund to finance big infrastructure projects and spur economic growth in the country.
Instead, alleged mastermind Low Taek Jho, better known as Jho Low, and his co-conspirators were suspected of using 1MDB as a scheme to pay bribes and enrich themselves.
In August, JPMorgan settled a case filed in Malaysia, agreeing to pay RM1.4 billion (US$339 million) “without admission of liability”.
The Singapore High Court two months later blocked attempts by 1MDB liquidators to sue Standard Chartered Plc and BSI Bank Ltd over transactions allegedly linked to the collapsed fund, citing technical grounds.
SRC obtained two loans from Malaysia’s state-controlled pension funds for investing in energy resources for the benefit of Malaysians, according to the suit.
The firm, under its management, instructed Baer to make “fraudulent payments” totalling about US$112.5 million to third parties.
Baer carried out the payments from 2013 to 2016, even though the 1MDB scandal had been publicised internationally by then, and there were “‘red flag grounds for suspicion” about SRC’s management, the suit alleged.
Separately, in Malaysia, a suit against Deutsche Bank AG for US$1.1 billion (RM4.55 billion) in damages is currently set for trial in January.
Sources close to the matter, who requested anonymity, said the German bank plans to contest the case. A Deutsche Bank spokesman declined to comment.
As of the end of July, about RM42.2 billion has been channelled to finance debt repayments and other commitments of 1MDB, according to the finance ministry.
The government has recovered RM29.7 billion of funds relating to 1MDB and its former unit SRC International Sdn Bhd since the establishment of the assets recovery account, the ministry said.
