Goldman Sachs sues Malaysia as 1MDB settlement dispute escalates
GOLDMAN Sachs Group took the unusual step of suing Malaysia in a UK court amid festering disagreement over a settlement tied to its role in the 1MDB investment-fund scandal.
“We filed for arbitration against the government of Malaysia for violating its obligations to appropriately credit assets against the guarantee provided by Goldman Sachs in our settlement agreement and to recover other assets,” a spokesperson for the New York-based bank said.
Executives at the Wall Street firm had grown increasingly frustrated with the country’s demands to redo its existing 2020 pact in favour of more onerous penalties, and the lack of information tied to the looted assets the nation has been recovering.
The complaint was filed on Wednesday (Oct 11) in the London International Court of Arbitration, a source familiar with the matter said.
The 1MDB investment fund became the centre of a multibillion-dollar scandal that spawned probes across continents. Months after striking the initial agreement in 2020, Goldman admitted to its role in the biggest foreign bribery case in US enforcement history, reaching multiple international settlements exceeding US$5 billion for its part in raising funds for 1MDB.
As part of the 2020 settlement with Malaysia, Goldman made an initial US$2.5 billion payment in September of that year. It also guaranteed the return of US$1.4 billion of 1MDB assets seized by authorities worldwide in exchange for Malaysia agreeing to drop criminal charges against the firm and not bring new ones.
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The bank also was required to make an interim payment of US$250 million if Malaysia did not receive at least US$500 million of assets and proceeds by August 2022, according to Goldman. The two sides have been locked in a disagreement over that, the bank has spelled out in public filings.
Malaysia’s government recently threatened to sue Goldman if the bank did not renegotiate the settlement.
“They are taking us for granted, they think that we’ll not proceed,” Malaysian Prime Minister Anwar Ibrahim said last month. “There’s nothing for us to lose except for the legal fees, which a government can manage. But it’s also the integrity of Goldman Sachs that’s in question.” BLOOMBERG
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