Malaysia seeks S$10b in reparations from Goldman Sachs over 1MDB


Goldman Sachs has consistently denied wrongdoing and said certain members of the former Malaysian government and 1MDB lied to the bank about the proceeds of the bond sales.
Goldman Sachs has consistently denied wrongdoing and said certain members of the former Malaysian government and 1MDB lied to the bank about the proceeds of the bond sales.PHOTO: REUTERS

KUALA LUMPUR (REUTERS) - Malaysia is seeking US$7.5 billion (S$10.3 billion) in reparations from Goldman Sachs Group over its dealings with scandal-linked state fund 1MDB, the Financial Times reported on Friday (Dec 21), citing the country's Finance Minister.

Malaysian prosecutors this week filed charges against Goldman Sachs in connection with its role as underwriter and arranger of three bond sales that raised US$6.5 billion for 1Malaysia Development Berhad (1MDB), the first criminal action against the US bank over the scandal.

Goldman Sachs has consistently denied wrongdoing and said certain members of the former Malaysian government and 1MDB lied to the bank about the proceeds of the bond sales.

In addition to the bonds' total value, Goldman Sachs should also return US$1 billion to cover US$600 million in fees paid to the bank and bond coupons that were "higher than the market rate", the FT quoted Malaysian Finance Minister Lim Guan Eng as saying.

The three 10-year bonds carried coupons ranging from 4.4 per cent to 5.99 per cent.

Mr Lim also told the FT that reparations should at least be more than US$1.8 billion, the sum Goldman Sachs has told investors it had set aside to cover potential losses related to 1MDB legal proceedings.

"Their figure is US$1.8 billion. Ours is US$7.5 billion," Mr Lim said.

 
 
 
 

Goldman Sachs did not immediately respond to a Reuters' request for comment.

The bank told the FT: "The 1MDB bond offerings were meant to raise money to benefit Malaysia; instead, a huge portion of those funds were stolen for the benefit of members of the Malaysian government and their associates."

Malaysia has sought jail terms and billions in fines from Goldman Sachs and four individuals who allegedly misappropriated about US$2.7 billion from the 1MDB bond proceeds.

Two former Goldman Sachs bankers, Tim Leissner and Roger Ng, were among those charged.

Singapore has banned Leissner, the bank's former South-east Asia chairman, from its securities industry for life after he pleaded guilty in the United States for conspiring to launder 1MDB money and violate the Foreign Corrupt Practices Act.

The US is also seeking extradition of Ng, who has been detained in Malaysia.

Malaysia is not currently negotiating with Goldman, but charges filed on Monday could bring the bank to the table, Mr Lim said.

The US Department of Justice alleges that about US$4.5 billion was misappropriated from 1MDB and used to buy, among others, real estate in London and New York, expensive jewellery and artwork, and a private jet.