Malaysian Prime Minister Najib Razak
Prime Minister Datuk Seri Najib Razak making an announcement Reuters

Malaysian Prime Minister Najib Razak has said it is too early to conclude if fraud had occurred in the $3.5 billion transaction between Malaysia's state investment firm 1MDB and Abu Dhabi-based International Petroleum Investment Company (IPIC).

Najib, who is also heading the finance ministry, added that 1MDB is currently studying the issue to prove that IPIC and its subsidiary Aabar Investment PJS Ltd are indeed responsible for the $3.5 billion fund paid by 1MDB to BVI.

AFP reported that in a written parliamentary reply to Bagan MP Lim Guan Eng from the DAP the prime minister said: "Therefore, it is too early to decide if there is a fraud between the transaction/dealings of 1MDB and IPIC."

Najib also said on Tuesday all documents related to 1Malaysia Development Bhd have been submitted to the National Audit Department as requested. 

Najib also confirmed in the Dewan Rakyat that following the ongoing dispute, 1MDB has not paid the bond interest on its energy unit 1MDB Energy (Langat) Limited and is in default. However, he also added that IPIC has settled the payment of the bond interest as it was guaranteed.

There was an agreement between the two companies in order to provide financial support to 1MDB. Under this agreement, IPIC had agreed to provide $1 billion in cash as well as assume $3.5 billion of 1MDB debt.

But last month, IPIC said the June 2015 agreement between the companies was terminated after the Malaysian firm failed to meet its obligations.