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July 27, 2020

Goldman Sachs inks $3.9bn settlement agreement with Malaysia over 1MDB case

American investment bank Goldman Sachs has agreed to pay $3.9bn to the government of Malaysia to settle the 1MDB Malaysian state fund scandal.

Last month, Malaysian officials reportedly refused to accept a $3bn settlement from Goldman Sachs for its embroilment in the scandal.

The latest settlement includes a $2.5bn cash payment to the Malaysian government along with its guarantee to return a minimum of $1.4bn in proceeds from 1MDB-related assets.

In return, the Malaysian government has agreed to drop criminal charges against the bank and its subsidiaries.

The government also agreed to withdraw criminal charges against the bank’s directors, officers and employees. This excludes the bank’s ex-employees Tim Leissner and Roger Ng.

Malaysian authorities filed criminal charges against Leissner and Ng over 1MDB in 2018.

The bankers were accused of working on three bond offerings that fetched around $6.5bn for the fund.

The pair allegedly conspired with the scandal’s mastermind Low and 1MDB employee Jasmine Loo to bribe Malaysian government officials to ensure Goldman Sachs’ participation in the bond issuances.

“We are confident that we are securing more money from Goldman Sachs compared to previous attempts, which were far below expectations,” Malaysia finance minister Tengku Zafrul Aziz noted.

The bank stated: “Today’s settlement is an important step towards putting the 1MDB matter behind us and will help enable the Malaysian government to move forward with additional recovery efforts and to execute on its economic priorities.

“There are important lessons to be learned from this situation, and we must be self-critical to ensure that we only improve from the experience.”

Goldman Sachs is said to have earned $600m for the 1MDB work.

In 2018, Abu Dhabi’s International Petroleum Investment Company sued Goldman Sachs for playing a central role in the 1MDB scandal and bringing significant losses to the firm.

A year ago, the Malaysia government filed criminal charges against 17 bankers of three Goldman Sachs subsidiaries over their involvement in the 1MDB scandal.

Goldman Sachs still faces charges in the US over its involvement in 1MDB. The bank has consistently denied misconduct in the case.

 

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