Goldman Sachs agrees to pay Malaysia $3.9 billion in 1MDB compensation

US investment bank Goldman Sachs, which played a shady role in the scandal surrounding Malaysia’s state investment fund 1Malaysia Development Berhad, or 1MDB, has reached a $3.9-billion settlement with the Malaysian government, both sides said on July 24.

The deal includes a $2.5-billion cash payout by Goldman Sachs and a guarantee to return at least $1.4 billion in assets linked to 1MDB bonds it underwrote.

In turn, the Malaysian government has agreed to drop all criminal and regulatory proceedings in Malaysia involving the US firm, including pending proceedings against subsidiaries of Goldman Sachs and certain current and former directors.

“We are confident that we are securing more money from Goldman Sachs compared to previous attempts, which were far below expectations,” Malaysia’s finance minister Tengku Zafrul Aziz said, adding that bringing the case to court would have cost “a lot of time, money and resources.”

He said that Goldman Sachs’ previous offer was $1.75 billion, made to the administration of former prime minister Mahathir Mohamad in 2019 after Malaysian prosecutors filed charges in December 2018 against three Goldman Sachs units for misleading investors over bond sales totaling $6.5 billion that the bank helped raise for 1MDB.

Elaborate scheme to steal $4.5 billion

The US Department of Justice alleges that $4.5 billion was stolen from the raised money in an elaborate scheme that spanned the globe and implicated former Malaysian prime minister Najib Razak, among others.

Goldman Sachs has consistently denied wrongdoing, saying that certain members of the former Malaysian government and 1MDB representatives lied to it about how proceeds from the bond sales would be used. The units of Goldman Sachs pleaded not guilty to the charges.

However, the settlement does not cover two former Goldman Sachs bankers, Tim Leissner and Roger Ng who were charged with money laundering and bribery in the 1MDB case. Both were extradited to the US where Leissner pleaded guilty and is cooperating with authorities, while Ng pleaded not guilty. Both are on bail and set to go on trial in New York early next year.

US investment bank Goldman Sachs, which played a shady role in the scandal surrounding Malaysia’s state investment fund 1Malaysia Development Berhad, or 1MDB, has reached a $3.9-billion settlement with the Malaysian government, both sides said on July 24. The deal includes a $2.5-billion cash payout by Goldman Sachs and a guarantee to return at least $1.4 billion in assets linked to 1MDB bonds it underwrote. In turn, the Malaysian government has agreed to drop all criminal and regulatory proceedings in Malaysia involving the US firm, including pending proceedings against subsidiaries of Goldman Sachs and certain current and former directors. “We...

US investment bank Goldman Sachs, which played a shady role in the scandal surrounding Malaysia’s state investment fund 1Malaysia Development Berhad, or 1MDB, has reached a $3.9-billion settlement with the Malaysian government, both sides said on July 24.

The deal includes a $2.5-billion cash payout by Goldman Sachs and a guarantee to return at least $1.4 billion in assets linked to 1MDB bonds it underwrote.

In turn, the Malaysian government has agreed to drop all criminal and regulatory proceedings in Malaysia involving the US firm, including pending proceedings against subsidiaries of Goldman Sachs and certain current and former directors.

“We are confident that we are securing more money from Goldman Sachs compared to previous attempts, which were far below expectations,” Malaysia’s finance minister Tengku Zafrul Aziz said, adding that bringing the case to court would have cost “a lot of time, money and resources.”

He said that Goldman Sachs’ previous offer was $1.75 billion, made to the administration of former prime minister Mahathir Mohamad in 2019 after Malaysian prosecutors filed charges in December 2018 against three Goldman Sachs units for misleading investors over bond sales totaling $6.5 billion that the bank helped raise for 1MDB.

Elaborate scheme to steal $4.5 billion

The US Department of Justice alleges that $4.5 billion was stolen from the raised money in an elaborate scheme that spanned the globe and implicated former Malaysian prime minister Najib Razak, among others.

Goldman Sachs has consistently denied wrongdoing, saying that certain members of the former Malaysian government and 1MDB representatives lied to it about how proceeds from the bond sales would be used. The units of Goldman Sachs pleaded not guilty to the charges.

However, the settlement does not cover two former Goldman Sachs bankers, Tim Leissner and Roger Ng who were charged with money laundering and bribery in the 1MDB case. Both were extradited to the US where Leissner pleaded guilty and is cooperating with authorities, while Ng pleaded not guilty. Both are on bail and set to go on trial in New York early next year.

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