KL says Goldman has agreed on $5.4b settlement in 1MDB case

KUALA LUMPUR • Goldman Sachs Group has reached a deal that would see Malaysia drop all criminal charges against the bank in exchange for US$3.9 billion (S$5.4 billion) in reparations over its role in raising money for the troubled sovereign wealth fund 1MDB.

The deal includes a cash settlement of US$2.5 billion paid to Malaysia, the Ministry of Finance said yesterday. At least another US$1.4 billion will come from seized assets of 1Malaysia Development Berhad being returned with the help of the US Department of Justice and Goldman Sachs, the ministry said in a statement.

The deal amount along with monies Malaysia has received from the Justice Department would come to more than US$4.5 billion, the ministry added.

It is unclear how the settlement with Malaysia will affect discussions between Goldman Sachs and the US Justice Department. The bank is close to an agreement in the United States after tussling over a potential guilty plea, Bloomberg News reported earlier this month.

The deal moves Goldman closer to ending its biggest legal threat since the darkest days of the 2008 financial crisis.

Goldman helped the Malaysian government raise US$6.5 billion for the 1MDB fund, collecting some US$600 million in fees from bond sales in 2012 and 2013, according to court filings. Prosecutors allege that part of that money was diverted to 1MDB officials and their associates.

Malaysian prosecutors brought charges against three units of the bank in 2018, then followed with additional accusations against Goldman's 17 current and former executives last year.

The bank has consistently denied wrongdoing, saying that former Malaysian officials lied about how proceeds from the bond sales would be used.

The deal will not affect charges against fugitive financier Low Taek Jho or other parties, Malaysia's Finance Ministry said.

Goldman's former South-east Asia chairman Tim Leissner has pleaded guilty to US charges including conspiracy to launder money and has admitted to bribing officials in Malaysia and the United Arab Emirates to get bond deals for the bank. And former Goldman banker Roger Ng has been extradited from Malaysia to the US to face similar charges.

"This settlement represents Goldman's acknowledgement of the misconduct of two of its former employees in the broader 1MDB fraudulent and corruption scheme," said Malaysia's Finance Ministry.

The deal is a major milestone for Prime Minister Muhyiddin Yassin, a step towards ending the nation's years-long effort to recover billions of dollars lost through the scandal, which played a part in the toppling of the Najib Razak government in 2018.

BLOOMBERG