The 1Malaysia Development Berhad logo is seen on a billboard at the fund's flagship Tun Razak Exchange site in Kuala Lumpur, July 3, 2015. Manan Vatsyayana/AFP/Getty Images

UPDTATE: 6:30 a.m. EDT — 1MDB issued a statement Monday saying Abu Dhabi state-run fund International Petroleum Investment Corp. has failed to pay interest on $1.7 billion on the Malaysian fund's 2022 bonds.

“1MDB wishes to make clear that it and its group entities will meet all of their other obligations under any other financing arrangements and have ample liquidity to do so,” the Malaysian state investment fund said, in the statement.

Original story:

The Malaysian government was cautioned about risks associated with the debt-ridden fund 1Malaysia Development Berhad in 2014, Bloomberg reported Monday citing Malaysian central bank’s Governor Zeti Akhtar Aziz. The state investment fund 1MDB, set up by Prime Minister Najib Razak, has been burdened with debt of over $12 million over the years and has been accused of mismanagement while facing corruption allegations.

Bank Negara Malaysia, the country’s central bank, issued two directives to the finance ministry, the only shareholder of 1MDB, alerting it about the fund’s growing debt, Zeti said, according to Bloomberg. However, Zeti did not elaborate on the ministry’s response.

“Of course this was on our radar screens,” Zeti said referring to 1MDB. “We were monitoring in terms of the level of their indebtedness, and whether they had any systemic implications on the banking sector.”

Meanwhile, the 1MDB and Abu Dhabi state-run fund International Petroleum Investment Corp. are facing fallout over which of the two must make a $50 million bond payment due Monday. The IPIC guaranteed $3.5 billion of 1MDB’s bonds when issued in 2012. After 1MDB fell short of cash, IPIC also agreed to give an emergency billion-dollar loan and to make interest payments on the same bonds, the Wall Street Journal reported. In exchange for IPIC taking over the debt, 1MDB agreed to transfer assets to the Abu Dhabi fund. However, IPIC said Monday that 1MDB and Minister of Finance, Inc., Malaysia (MOF), failed to pay the debts to IPIC.

“1MDB and MOF continue to be bound by their respective obligations under the terms of the Binding Term Sheet [dated May 28, 2015], including their continued indemnification of IPIC and Aabar [Investments PJS] for any non-performance under the Binding Term Sheet and in relation to any claims which may be made against IPIC pursuant to the guarantees entered into by IPIC in respect of certain 1MDB group bond issuances,” IPIC said, in a statement.

The fund is also in the center of a corruption scandal involving Najib. The premier, who founded 1MDB in 2009 to improve economic growth in Malaysia, has been linked to the scandal at the fund from which $681 million was traced to his bank accounts. The prime minister has consistently denied the allegations, first made in a July 2015 report by the Wall Street Journal, which said that investigators tracked the money from an account at Falcon Private Bank in Singapore to accounts in Malaysia.

In January, Malaysia’s Attorney General Mohamed Apandi Ali declined to arraign Najib for corruption allegations, saying the money was a “personal donation” from the Saudi royal family. However, he did not specify why the royal family donated the money or what it was used for.

Apart from Malaysia, the 1MDB investigation is also underway in the United States, Luxembourg, Singapore, Switzerland, Hong Kong and Abu Dhabi.