ISTANBUL (BLOOMBERG) - Malaysia is seeking direct talks with Goldman Sachs Group to recoup more than US$600 million (S$824 million) the bank earned from raising funds for troubled state fund 1Malaysia Development Bhd (1MDB), the country's leader-in-waiting Anwar Ibrahim has confirmed.
Goldman has lost US$11 billion from its market value since Datuk Seri Anwar said on Nov 12 that the country is seeking a "full refund" of what the bank made for arranging bond sales for scandal-ridden 1MDB.
Mr Anwar expects that market pressure will be enough to push the lender to come to the negotiating table, but notes a lawsuit is a second option.
"We're quite optimistic that they're responding," Mr Anwar said in an interview in Istanbul on Nov 27.
"They have been adversely affected by all this and we have options: Negotiate with them, which is probably best for Malaysia", or litigation, he said.
Malaysia has held initial discussions with the US Justice Department to seek help to recoup the funds, Mr Anwar said.
The US filed forfeiture lawsuits against US$1.7 billion of assets that it said were bought using money stolen from 1MDB, including mansions in California, luxury condos in New York, jewellery, artworks, and a US$250 million yacht once owned by fugitive financier Low Taek Jho.
The yacht has since been put up for auction in a judicial sale process. Bidding closed on Wednesday.
Global investigations into 1MDB have picked up pace since Malaysia's new government reopened a domestic probe and Tim Leissner, Goldman's former South-east Asia chairman, pleaded guilty to conspiring to launder money and violate foreign bribery laws.
Goldman spokesman Edward Naylor referred Bloomberg to an earlier comment he provided, which noted the commissions reflected "the risks we assumed at the time, specifically movement in credit spreads tied to the specific bonds, hedging costs and underlying market conditions".
Discussions with Goldman will start with Malaysia seeking at least US$600 million, Mr Anwar said, with the country expecting to get a higher amount as negotiations continue.
The bank made US$593 million for arranging three bond sales that raised US$6.5 billion for 1MDB, which was "exorbitant", he said.
"We hope this can be resolved pretty fast," Mr Anwar said. "How can you refuse to cooperate when you understand that billions have been squandered from the public purse?"