Goldman Sachs, Malaysia agree to a total settlement of US$3.9bil over 1MDB bonds

  • Nation
  • Friday, 24 Jul 2020

PETALING JAYA: Goldman Sachs agreed to a total settlement of US$3.9bil (RM16.63bil) as part of its settlement to resolve outstanding charges and claims related to the three bond transactions that the company had structured and arranged for 1Malaysia Development Bhd (1MDB), says the Finance Ministry.

The Finance Ministry said the settlement includes a cash payment of US$2.5bil (RM10.66bil) and a guarantee for a full recovery value of at least US$1.4bil (RM5.97bil) in assets that were traceable to the diverted proceeds from the three bond transactions.

It noted that Goldman Sachs, at their cost, will also assist the government by appointing an asset recovery specialist to recover other related assets currently outside Malaysia, adding that the settlement represents a significant increase compared to the previous offer of US$1.75bil (RM7.46bil) made by Goldman Sachs to the previous administration in 2019.

Finance Minister Tengku Datuk Seri Zafrul Aziz said the settlement represents assets that rightfully belong to the Malaysian people.

"We are confident that we are securing more money from Goldman Sachs compared to previous attempts, which were far below expectations.

"We are also glad to be able to resolve this outside the court system, which would have cost a lot of time, money and resources. With this settlement, we will have the return of the monies expedited, and not held up by lengthy and costly court battles and legal process," he said in a statement Friday (July 24).

The ministry added that from this total settlement and from the monies that Malaysia has already received from the US Department of Justice, more than US$4.5bil (RM19.19bil) will be returned to the people.

It also said that the government remains committed to recovering other outstanding assets.

The ministry added that the settlement by Goldman Sachs represents its acknowledgment of the misconduct of two of its former employees in the broader 1MDB fraudulent and corruption scheme.

It said the settlement will not affect Malaysia’s claims against fugitive businessman Low Taek Jho, also known as Jho Low, and other parties related to the 1MDB scandal.

In June, Tengku Zafrul said the government would not be willing to accept compensation of US$3bil (RM12.8bil) from Goldman Sachs.

The government had charged Goldman Sachs and 17 current and former directors of its units for allegedly misleading investors over bond sales totalling US$6.5bil (RM27.74bil) that the company helped raise for sovereign wealth fund 1MDB.

According to the US Department of Justice, Goldman Sachs earned US$600mil (RM2.56bil) in fees for its work with 1MDB.

During the Pakatan Harapan administration, then prime minister Tun Dr Mahathir Mohamad in December 2019 had said that Goldman Sachs had offered "one point something billion" dollars for an out-of-court settlement over its role in the 1MDB scandal.

Dr Mahathir had said that they had instead demanded US$7.5bil (RM31.98bil) from Goldman Sachs.

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