Malaysia drops charges against Goldman Sachs in settlement
KUALA LUMPUR, Malaysia — Malaysia’s government has reached a $3.9-billion US settlement with Goldman Sachs in exchange for dropping criminal charges against the bank over bond sales that raised money for the 1MDB sovereign wealth fund, which was looted of billions of dollars.
Malaysian and U.S. prosecutors had alleged that the bond sales organized by Goldman Sachs provided one of the means for associates of ex-prime minister Najib Razak to steal billions over several years from a fund that was ostensibly set up to accelerate Malaysia’s economic development.
Najib is on trial on corruption charges linked to the scandal after his election defeat in May 2018. Goldman and two of its former executives were charged in December that year with alleged breaches of securities laws including misleading investors over the bond sales. Another 17 former and current Goldman executives were also charged last year over alleged roles in the fraud.
The finance ministry said in a statement that Goldman agreed to pay $2.5 billion in cash and guarantee that Malaysia gets at least $1.4 billion in proceeds from assets bought with the bond money that have since been seized around the world.
It said Friday the deal was a sharp jump from Goldman’s previous offer of $1.75 billion in 2019 and will avoid lengthy and costly court battles.
The settlement came after a new government, which includes Najib’s Malay party, took power in March after a political coup. It is lower than the $7.5-billion settlement that the previous government had sought.
“With today’s settlement amount and the monies that Malaysia has already received from the U.S. Department of Justice, more than $4.5 billion will be returned to the people of Malaysia,” the ministry said, adding that the government is committed to recovering other outstanding assets. It said the deal showed that Goldman acknowledged misconduct by its two former employees and will not affect Malaysia’s charges against fugitive financier Low Taek Jho, identified as an alleged mastermind of the fraud, and other parties.