KUALA LUMPUR: The 1MDB asset recovery task force today revealed that it is investigating whether negotiators and lawyers representing the government of Malaysia in the settlement agreement with Goldman Sachs may have failed in their fiduciary duty or were negligent in arriving at the settlement agreement.
"Such lapses on the part of negotiators and lawyers, in failing to negotiate a fair and clear settlement agreement have compromised the government of Malaysia's position in the ongoing dispute," the 1MDB taskforce chairman Datuk Seri Johari Abdul Ghani said in a statement today.
The taskforce is also considering to initiate legal proceedings against a number of foreign banks that facilitated the fund transfers related to 1MDB without conducting proper Know Your Client (KYC) processes at that time.
The 1MDB taskforce held a meeting on Jan 22, 2024 to discuss the latest update/status on the asset recovery and other matters relating to the Goldman Sachs dispute.
Goldman Sachs has filed a request for arbitration with the London Court of International Arbitration (LCIA) on Oct 11, 2023 in a bid to offset fines imposed on other institutions as part of its US$1.4 billion asset recovery guarantee.
The settlement agreement signed on August 2020 between the government of Malaysia and Goldman Sachs required Goldman Sachs to pay US$$2.5 billion cash payment and provide the government of Malaysia with a US$$1.4 billion asset recovery guarantee.
Goldman Sachs contends that its obligations under the asset recovery guarantee have been discharged through the fines imposed on AmBank Group (RM2.8 billion) and the settlement agreement with International Petroleum Investment Co (US$$1.8 billion).
"However, the government of Malaysia disputes this, and asserts that the fines imposed on AmBank and the settlement with IPIC are not encompassed within the scope of the US$$1.4 billion asset recovery guarantee, Johari said.
1MDB paid unusually high advisory fees of US$606 million to Goldman Sachs for advising on the issuance of three bonds totalling US$6.5 billion.
Goldman Sachs' direct involvement in the 1MDB scandal resulted in it being fined by various regulators, including the Department of Justice (DOJ), for the sum of US$$2.9 billion.
The amount paid by Goldman Sachs in fines however, surpassed the cash payment paid to the government of Malaysia (US$$2.5 billion), despite Malaysia suffering the most from the 1MDB scandal.
Malaysia has to pay USD$6.5 billion (principal amount) and interest of US$3.2 billion over the span of 10 years, to service 1MDB debt.
The government of Malaysia filed its reply to Goldman Sachs' arbitration request on Nov 8, 2023 and are currently in the process of agreeing on the procedural timetable.
"The 1MDB taskforce is firmly committed in addressing the 1MDB matter transparently and holding all parties accountable. The complexities of the settlement agreement require careful examination, and the 1MDB taskforce is actively participating in the arbitration process to ensure a fair resolution in the best interests of the Malaysian people," Johari said.