Goldman Sachs, Malaysia settle scandal for $3.9B

Goldman Sachs has agreed to a $3.9 billion settlement with Malaysia as it begins to put behind it a kleptocracy scandal that changed the course of politics in the country.

Malaysian prosecutors filed charges in 2018 against several Goldman units for their role in helping to raise billions of dollars for a sovereign wealth fund known as 1MDB that officials were later found to be using as a personal piggy bank. The scandal led to the ouster of Malaysia’s former prime minister, Najib Razak, and a far-reaching foreign bribery and corruption investigation by U.S. prosecutors against the bank and the purported mastermind of the scheme, Malaysian financier Jho Low.

Malaysia said Friday that the Wall Street bank would pay $2.5 billion to resolve the case. Goldman also pledged to cover any shortfall from the sale of $1.4 billion in assets that have been seized by government authorities, including a $250 million yacht, several U.S. hotels, a $35 million Bombardier jet and an Oscar that once belonged to

Marlon Brando.

“This settlement represents assets that rightfully belong to the Malaysian people,” the country’s ministry of finance said in a statement Friday evening.

The Malaysian government had previously said it would seek criminal fines in excess of $2.7 billion and had charged more than a dozen executives at the bank with fraud. Under the settlement, the criminal charges against Goldman and those executives were dismissed.

Goldman said in a statement the deal with Malaysia “is an important step towards putting the 1MDB matter behind us.”

But the bank still must still resolve the investigations by prosecutors and bank regulators in the United States.

U.S. prosecutors contend that as much as $4.5 billion was pilfered from the sovereign wealth fund — officially known as 1Malaysia Development Berhad — into the bank accounts of Low, Najib, his family and his friends. Goldman Sachs helped the fund to raise $6.5 billion in 201213 through a series of bond sales, $2.5 billion of which authorities say was then diverted to senior officials.

Goldman Sachs, which received $600 million in payments for its bond work, has consistently denied any wrongdoing.