Goldman pays Malaysia $3.4 billion as part of 1MDB settlement

The Malaysian government received the money in its escrow account on Aug 27, 2020. PHOTO: AFP

KUALA LUMPUR (BLOOMBERG) - Goldman Sachs Group has made the US$2.5 billion (S$3.4 billion) payment it pledged to the Malaysian government to settle allegations of misconduct related to 1MDB, and the funds will be used to repay outstanding debt of the disgraced state fund, according to a person familiar with the matter.

The government received the money in its escrow account on Thursday (Aug 27), according to the person, who asked not to be named as the information is private.

Malaysia plans to use the funds to help repay 1MDB's outstanding debt, including US$3.5 billion of bonds due in 2022 and 2023, which are now held under the finance ministry, the person added.

A representative for Goldman Sachs declined to comment, while a representative for Malaysia's finance ministry didn't immediately respond to requests for comment.

The payment is part of an agreement Goldman Sachs reached with Malaysia to pay US$2.5 billion in cash and guarantee the return of US$1.4 billion from 1MDB assets seized around the world.

In return, Malaysia will drop criminal charges against the US bank, allowing it to start moving beyond one of its worst scandals since the financial crisis.

The money comes at an opportune time for Malaysia, which is seeking funding to shore up an economy battered by the pandemic.

The government is set to boost its debt limit for the first time since 2009 to help fund its US$70 billion of stimulus measures.

Goldman Sachs will have a case management hearing over its criminal charges at a Malaysian court on Sept 4, a date that was set before the July deal was struck.

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