KUALA LUMPUR, Feb 27 — The Malaysian government today announced that two Abu Dhabi companies have agreed to settle legal proceedings involving 1Malaysia Development Berhad (1MDB) by paying US$1.8 billion (RM8 billion) to Malaysia.

The Finance Ministry said its Minister of Finance (Incorporated) (MoF Inc) and 1MDB have reached a settlement regarding their dispute with Abu Dhabi’s International Petroleum Company (Ipic) and Aabar Investments PJS (Aabar PJS) in respect of legal proceedings in the London Court of International Arbitration and the London High Court.

"In this respect, IPIC and Aabar PJS have agreed to pay US$1.8 billion to Minister of Finance (Incorporated) and 1MDB.

"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 statement said.

MoF Inc owns 1MDB, while Abu Dhabi's sovereign wealth fund IPIC's wholly-owned subsidiary is Aabar PJS.

Malay Mail understands that Datuk Seri Tengku Zafrul Abdul Aziz played a key role in the negotiations on this long-standing dispute over the past two years.

Tengku Zafrul, who had previously served as finance minister under the Muhyiddin and Ismail Sabri administration, was understood to have continued the talks under Prime Minister Datuk Seri Anwar Ibrahim's current administration.

Malay Mail understands that the current Cabinet had asked Tengku Zafrul to continue negotiations and that he had closed the negotiations in his current role as international trade and industry minister, with the settlement finally reached after several rounds of meetings over the last two years.

Separately, local financial publication The Edge cited sources when reporting that the Yang di-Pertuan Agong was also involved in the meetings, and that the ruler is in Abu Dhabi now to finalise the settlement agreement.