KUALA LUMPUR: Goldman Sachs has agreed to pay US$3.9 billion to Malaysia to settle outstanding charges and claims related to the three bond transactions that the global investment bank arranged for 1Malaysia Development Bank (1MDB).
Announcing this today, the Ministry of Finance said with the settlement and the money that Malaysia had received from the US Department of Justice, more than US$4.5 billion would be returned to Malaysians.
"In this regard, the government remains committed to recovering other assets that have not yet been returned."
The settlement includes a cash payment of US$2.5 billion and a guarantee for full repayment of at least US$1.4 billion in terms of assets related to the revenue that has been misappropriated through the three bond transactions.
"The settlement was arrived at after a week-long discussion between the Malaysian team and the Goldman Sachs delegation that resumed after a four-month break due to the Covid-19 pandemic.
The Malaysian team included the Attorney-General's Chambers, the Securities Commission, the National Financial Crime Prevention Centre and the Malaysian Anti-Corruption Commission.
The settlement is in in exchange for dropping criminal charges against the bank.Malaysia was reportedly seeking to recover US$2.7 billion allegedly misappropriated from three 1MDB bond issuances totalling US$6.5 billion.
The government also demanded the return of US$600 million Goldman Sachs had pocketed as fees.
Malaysian and US prosecutors have alleged that the bond sales organised by Goldman Sachs for 1MDB provided one of the means for associates of former prime minister Datuk Seri Najib Razak to steal billions over several years from the fund.
Three Goldman Sachs subsidiaries have pleaded not guilty to misleading investors about the three 1MDB bond issuances.
The ministry said Goldman Sachs, at its own expense, would also assist the government in appointing asset recovery experts to recover other assets currently outside Malaysia.
The total settlement is a significant increase when compared to the previous offer of US$1.75 billion made by Goldman Sachs to the government in 2019.
Finance Minister Tengku Datuk Seri Zafrul Aziz said the settlement represented assets that were the rights of Malaysians.
"The agreement has succeeded in achieving far greater asset returns from Goldman Sachs compared to the previously offered value which was far below expectations.
''We are also grateful to be able to resolve this matter outside the court system, which will cost a lot of time and financial resources,"Tengku Zafrul said with the solution, Malaysia can expedite the return of assets, without going through a court process that was expensive and complicated.
The settlement is also an admission by Goldman Sachs over the misconduct of two of its former employees in the 1MDB fraud and corruption scheme.
The ministry said the settlement would not affect Malaysia's claim against Jho Low and other individuals related to the 1MDB scandal.