The tale of woe around the Malaysian fund continues.

Embattled Malaysian state investment fund 1MDB, which is already at the centre of an alleged corruption saga that has seen regulators initiate probes into bank accounts, has defaulted on $1.75 billion in bonds after missing an interest payment, it said this week.

1Malaysia Development Berhad, to give its full name, “has not made payment of $50.3 million interest as required under the terms of a binding term sheet executed on 28 May 2015”.

The fund has blamed the non-payment on International Petroleum Investment Co, the Abu Dhabi sovereign wealth fund. The interest payment is on fixed-rate 5.75 per cent notes that were issued with a maturity of 2022.

“Notwithstanding the dispute with IPIC, 1MDB reiterates that it will meet all of its other existing financial obligations and has ample liquidity to do so. 1MDB withheld the interest payment following claims by IPIC that certain payments and other obligations were still owed it,” the fund said in a statement earlier this week.

A scandal, lasting many months, has been developing around how various persons, including Malaysian prime minister Najib Razak, who founded the fund in 2009 and is its chairman, have allegedly siphoned off money from 1MDB. Regulators in Switzerland, Luxembourg and Singapore have investigated bank accounts and transactions. The affair has cast a shadow over Malaysia and its standards of corporate governance and transparency.