Malaysia 1MDB scandal

Malaysia seeking ‘full refund’ of Goldman Sachs fees for deals connected to 1MDB scandal

  • Finance Minister Lim Guan Eng said the firm has “admitted culpability” after one of its former bankers entered a guilty plea for his role in the scandal
PUBLISHED : Monday, 12 November, 2018, 9:30pm
UPDATED : Monday, 12 November, 2018, 10:35pm

Malaysia is seeking a full refund of all the fees it paid to Goldman Sachs for arranging billions of dollars worth of deals for troubled state fund 1MDB, according to Finance Minister Lim Guan Eng.

Goldman has “admitted culpability” after former banker Tim Leissner entered a guilty plea for his role in the scandal, Lim said in a Monday interview with radio station BFM. Lim is banking on the firm’s “indirect” admission of wrongdoing – and US laws against kleptocracy – to help Malaysia recoup fees including nearly US$600 million that it paid Goldman for three bond deals.

“I would be happy if we can get around 30 per cent net after all the expenses incurred” from the entire 1MDB scandal, he said, referring to the overall amount of funds thought to be lost through the troubled state fund. Prime Minister Mahathir Mohamad has set a goal of bringing back US$4.5 billion.

Goldman has consistently said that it believed proceeds from the US$6.5 billion of 1MDB debt sales it underwrote were for development projects and that Leissner, its former Southeast Asia chairman, withheld information from the firm. Leissner said in his guilty plea unveiled on Friday that others at the bank helped him conceal bribes used to retain business in Malaysia.

Recouping the 1MDB funds would require tracing assets bought using the money, with Malaysian authorities focused on locating Low Taek Jho, or Jho Low, who has been described by investigators as a central figure in the 1MDB transactions.

We are still relying on Interpol to locate this rather slippery character
Malaysian Finance Minister Lim Guan Eng, on fugitive financier Jho Low

Records show that Low, who remains at large, isn’t in China on a Malaysian passport as previously thought, Lim told the BFM radio station. It is unclear if Low entered the country using different travel documents, he said. Chinese authorities have been cooperative, with Lim adding that he hoped they would help if Low had managed to slip into the country.

“It is a matter of trying to determine where he is first before we can ask other countries to help us to detain him and extradite him back to Malaysia if there’s an extradition agreement,” Lim said. “But so far, as I said, we are still relying on Interpol to locate this rather slippery character.”

1Malaysia Development Bhd (1MDB) is a state investment fund that came under investigation for alleged impropriety in July 2015, after reports emerged that investigators traced some US$700 million wired into Prime Minister Najib Razak’s bank accounts. Both the fund and the premier denied wrongdoing, but the attorney general launched an investigation into alleged corruption. 1MDB was 42 billion ringgit (US$10 billion) in debt at the time of the scandal.