Goldman, Malaysia ink $5.3b settlement deal over 1MDB scandal

NEW YORK • Goldman Sachs Group and Malaysia signed an agreement to finalise the bank's US$3.9 billion (S$5.32 billion) settlement over the 1Malaysia Development Berhad (1MDB) scandal.

The US bank, which had announced an agreement in principle on July 24, confirmed the formal accord in a regulatory filing late on Tuesday in New York.

The firm must make a US$2.5 billion cash payment to Malaysia within 10 days, people with knowledge of the matter said this week, asking not to be identified as the information is private.

The pact marks a major step towards resolving the scandal surrounding 1MDB, a Malaysian state fund that is at the centre of global investigations into corruption and money-laundering.

The deal announced last month called for Goldman to pay US$2.5 billion while guaranteeing the return of US$1.4 billion of 1MDB assets seized by the authorities around the world, in exchange for Malaysia dropping charges against the bank.

The deal helps the bank move on from its worst scandal since the global financial crisis, while Malaysia gets to recoup much of the US$4.5 billion that prosecutors said was lost from 1MDB at a time when it was seeking funds for its massive stimulus package.

Over much of a decade, 1MDB has become shorthand for one of the world's most daring heists - a conspiracy that spawned probes in Asia, the United States and Europe.

The authorities spent years tracking funds that allegedly flowed from 1MDB into high-end art and real estate, a super yacht and, ironically, the hit Hollywood movie The Wolf Of Wall Street, chronicling an earlier era of financial crimes.

The case against the bank focused on its work raising US$6.5 billion in 2012 and 2013 for the fund, much of which was allegedly siphoned off by people connected to the country's former prime minister Najib Razak.

Najib was last month jailed for 12 years after being convicted on all seven charges in the first of several trials related to 1MDB.

The scandal's alleged mastermind, jet-setting Malaysian financier Low Taek Jho, has also been charged in Malaysia and the US. Low denies any wrongdoing, and his whereabouts are unknown.

Goldman's investment banking group, led at the time by now-chief executive David Solomon, collected an unusually high US$600 million from the bond sales.

The pact does not resolve other pending governmental and regulatory probes related to 1MDB, including one from the US Department of Justice.


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A version of this article appeared in the print edition of The Straits Times on August 20, 2020, with the headline Goldman, Malaysia ink $5.3b settlement deal over 1MDB scandal. Subscribe