KUALA LUMPUR (BLOOMBERG) - Malaysia has dropped criminal charges against Goldman Sachs Group units, a key step in the US$3.9 billion (S$5.3 billion) settlement agreement that allows the bank to move on from the 1MDB scandal.
The US bank was discharged amounting to acquittal, according to court proceedings in Kuala Lumpur on Friday (Sept 4).
The move marks progress in Goldman Sachs' efforts to resolve its worst scandal since the financial crisis as it grapples with separate discussions with the United States Department of Justice for a settlement over 1Malaysia Development Berhad, or 1MDB.
As part of the deal with Malaysia, the bank paid US$2.5 billion in cash to Malaysia last week and pledged to guarantee the return of US$1.4 billion from 1MDB assets seized around the world over the coming years.
In exchange, Malaysia would drop criminal charges against the bank's units over accusations that they misled investors in raising billions of dollars for 1MDB while allegedly knowing the funds would be misappropriated.
Goldman Sachs had to boost its legal reserves by US$2.01 billion to account for the Malaysia settlement, shaving its second-quarter net income by 85 per cent and wiping out what had been a surprise jump in profit due to trading gains.
The bank's settlement does not affect Malaysia's claims against other people, including the scandal's alleged mastermind Low Taek Jho, also known as Jho Low, and other parties.
Prosecutors seek to bring former Goldman Sachs banker Roger Ng, who is in the US to face 1MDB-related charges, back to Malaysia in November to face similar accusations.
Ng's next case mention is set for Sept 10.
The scandal surrounding 1MDB had led to the ouster of former premier Najib Razak in 2018 and triggered corruption investigations in at least 10 countries, including Singapore and Switzerland.