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Malaysia's scandal-hit 1MDB sells energy assets for $2.3B

Najib Razak, Prime Minister of Malaysia.
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Najib Razak, Prime Minister of Malaysia.

Malaysia's beleaguered sovereign wealth fund 1Malaysia Development Berhad (1MDB) has sold its energy assets for 9.83 billion ringgit ($2.3 billion) to a Chinese nuclear power supplier, in a move that should help it cut its debt burden.

As part of the deal, which is expected to be completed in February 2016, China General Nuclear Power and its subsidiaries will acquire the Edra group of companies and assume all the relevant gross debt and cash.

This transaction was a major milestone in the 1MDB rationalization plan that was presented to Malaysia's cabinet on May 29, 1MDB said in a statement.

The fund has been under scrutiny for months amid allegations of false auditing, huge debt and, more recently, financial fraud, with alleged links to Malaysia's Prime Minister Najib Razak himself. The fund is struggling with a reported $11 billion debt load.

Sultans from nine of Malaysia's states, who typically keep to ceremonial duties, have asked for an investigation into the fund, while the country's central bank this month urged Malaysia's attorney general to begin an criminal investigation of 1MDB, amid signs of increasing unease with the government's handling of the affair.

Najib, who has repeatedly denied any wrongdoing in his handling of 1MDB, told The Star newspaper that the business model of the fund was "too idealistic," although the impact of its poor performance would be contained.