Goldman pays Malaysia $2.5 bn as part of 1MDB deal

Pulse News Agency International by AFP

August 28, 2020 12:50 PM

Goldman Sachs has paid Malaysia $2.5 billion as part of a settlement over the US investment bank's role in the multi-billion-dollar 1MDB scandal, officials said Friday.

Malaysia's former prime minister Najib Razak was last month handed a 12-year jail term after being convicted on all seven charges in the first of several trials related to 1MDB

The agreement, which has a total value of $3.9 billion, was announced last month after lengthy negotiations.

Billions of dollars were looted from sovereign wealth fund 1Malaysia Development Berhad in a fraud that involved former prime minister Najib Razak and his cronies.

The cash plundered from state coffers bankrolled a global spending spree, and was used to buy everything from artwork, to real estate and a superyacht.

Goldman's role came under scrutiny over bond issues totalling $6.5 billion it helped arrange for the investment vehicle, with Malaysia claiming large amounts were misappropriated during the process.

The settlement comprises a payment of $2.5 billion to Malaysia and a guarantee that at least $1.4 billion in assets acquired with misappropriated funds would be recovered.

A spokesman for Malaysia's finance ministry confirmed the cash part of the settlement "has been paid by Goldman Sachs and received via an escrow account" on Thursday.

Bloomberg News reported the funds will be used to repay outstanding debts of 1MDB, citing a person familiar with the matter.

Najib was voted out of office in 2018 in large part due to public anger over the scandal.

The government that took over charged Goldman and a string of former and current employees over the fraud, as well as demanding hefty compensation.

Under the agreement, Malaysia will end all criminal proceedings against the bank.

Prime Minister Muhyiddin Yassin said last month that, combined with 1MDB-linked funds already returned to Malaysia by the United States, the country will receive a total of $4.5 billion.

Najib was last month handed a 12-year jail term after being convicted on all seven charges in the first of several trials related to 1MDB. He remains free on bail while he appeals.

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Pulse News Agency International by AFP