1MDB scandal: Goldman Sachs, Malaysia agree to US$3.9 billion settlement
- The deal includes a US$2.5 billion cash payout by Goldman and another US$1.4 billion will come from seized 1MDB assets being returned with the help of the bank
- The agreement won’t affect charges against fugitive financier Jho Low or other parties
The deal amount along with monies Malaysia has received from the Justice Department would amount to more than US$4.5 billion, the finance ministry said.
It’s unclear how the settlement with Malaysia will impact discussions between Goldman and the US Justice Department. The bank is close to an agreement in the US after tussling over a potential guilty plea.
The deal moves Goldman closer to ending its biggest legal threat since the darkest days of the 2008 financial crisis.
Goldman helped the Malaysian government raise US$6.5 billion for the 1MDB fund, collecting some US$600 million in fees from bond sales in 2012 and 2013, according to court filings. Prosecutors allege that part of that money was diverted to 1MDB officials and their associates.
Malaysian prosecutors brought charges against three units of the bank in 2018, then followed with additional accusations against Goldman’s 17 current and former executives last year.
The bank has consistently denied wrongdoing, saying that former Malaysian officials lied about how proceeds from the bond sales would be used.
Malaysia sought Hong Kong’s help in search for 1MDB fugitives
“This settlement represents Goldman’s acknowledgement of the misconduct of two of its former employees in the broader 1MDB fraudulent and corruption scheme,” the finance ministry said.
On Friday, Muhyiddin said the government was committed to continuing efforts to recover other assets linked to 1MDB.
The Mahathir government demanded as much as US$7.5 billion from Goldman, while its negotiators had touted figures of around US$2 billion to US$3 billion in private discussions.
“We are confident that we are securing more money from Goldman Sachs compared to previous attempts, which were far below expectations,” Finance Minister Tengku Zafrul Aziz said in a statement.
Additional reporting by Reuters