Malaysia privately discusses slashing Goldman Sach’s 1MDB penalty to just US$2 billion

Malaysia has long said the Wall Street bank owes US$7.5 billion, in what Finance Minister Lim Guan Eng called ‘reparation payments’

But negotiators now seem prepared to settle for a fraction of that, so that a deal can be reached before the end of the year

3-MIN READ3-MIN

Published: 10:45am, 23 Oct 2019Updated: 8:40pm, 23 Oct 2019

Again and again, Malaysia has publicly demanded Goldman Sachs pay an eye-popping US$7.5 billion for its role in the 1MDB scandal. But privately, Malaysian negotiators are considering settling for a fraction of that.

Representatives for Malaysia have discussed figures of around US$2 billion to US$3 billion in talks with the Wall Street bank, according to people with knowledge of the matter. Though a final deal may diverge from that range, it shows what negotiators for the country may be willing to accept. Simultaneously, Malaysian prosecutors are trying to turn up the pressure by pushing for Goldman’s criminal case to be heard at the country’s High Court.

Malaysian Prime Minister Mahathir Mohamad. Photo: DPA

Prime Minister Mahathir Mohamad, 94, is keen to reach an accord before the end of the year to show progress on his signature pledge to recoup money plundered from the scandal-ridden state investment fund. He has dispatched Daim Zainuddin, a confidant outside his cabinet, to serve as a top deal maker, the people said, asking not to be named because talks are confidential. A sizeable settlement would help cement the country’s fiscal footing, which Mahathir has cited as a reason he has delayed handing over power to his former protégé, Anwar Ibrahim.

Yet, for Goldman Sachs, Malaysia’s probe is among a slew of related international investigations that the company is eager to solve in their entirety, and it is unclear how much credit regulators and prosecutors back in the United States may give the firm for a costly deal with the Southeast Asian nation.

Malaysian Finance Minister Lim Guan Eng has said Goldman owes billions in ‘reparation payments’. Photo: EPA

Goldman reaped US$600 million from helping 1MDB raise US$6.5 billion in 2012 and 2013, much of which later went missing. Malaysia has demanded the bank shoulder those losses. Earlier this month, Finance Minister Lim Guan Eng reiterated in an interview that means “reparation payments” amounting to US$7.5 billion.