KUALA LUMPUR – The agreement signed between the Malaysian government and Goldman Sachs Group Inc (Goldman Sachs) regarding the recovery of 1Malaysia Development Bhd (1MDB) assets in 2020 was vague and not detailed, said 1MDB Asset Recovery Taskforce chairman Datuk Seri Johari Abdul Ghani.
He said that the matter was a factor in Goldman Sachs’ refusal to fulfil its asset recovery guarantee, which totaled US$1.4 billion (RM6.63 billion) to the Malaysian government.
“In 2020, we had come to an agreement; we were paid US$2.5 billion and then promised to be paid another US$1.4 billion (recovery of assets), but the agreement signed was not clear.
“It (Goldman Sachs) took advantage by refusing to pay US$1.4 billion because it said that we had collected, through AmBank, a fine of US$640 million. Then, we received about US$430 million from the DoJ (Justice Department).
He said that Goldman Sachs also included Malaysia’s settlement with the International Petroleum Investment Company (IPIC) to offset it as part of the firm’s US$1.4 billion asset recovery guarantee, and then claimed that its obligations under the asset recovery guarantee have been discharged (through all the fines and settlement).
“We said no, that the fine and the settlement are not encompassed within the scope of the US$1.4 billion asset recovery guarantee. Hence, there is a dispute because the agreement is unclear,” he said.
Previously, Johari, who is also plantation and commodities minister, reportedly said that the settlement agreement signed in August 2020 between the Malaysian government and Goldman Sachs required the firm to pay a US$2.5 billion cash payment and provide Malaysia with a US$1.4 billion asset recovery guarantee.
He added that, thus far, the task force is still in the process of seeking arbitration to resolve the matter.
According to him, obtaining the US$1.4 billion recovery asset guarantee will take some time, as it depends on Goldman Sachs’ decision on whether it wants to fight the Malaysian government’s claim regarding the matter through legal proceedings.
He stated that if Goldman Sachs decides to fight it, the process will take time; however, if the firm agrees to settle, the process will be quick. He also cautioned that the process could take a long time because it involves a large sum of money.
1MDB paid Goldman Sachs an unusually high advisory fee of $606 million for advising on the issuance of three bonds totaling $6.5 billion.
Goldman Sachs’ direct involvement in the 1MDB scandal resulted in a $2.9 billion fine from various regulators, including the DoJ.
Goldman Sachs’ fines, however, exceeded the cash payment made to the Malaysian government (US$2.5 billion), despite Malaysia suffering the most from the 1MDB scandal, having to pay US$6.5 billion (principal amount) and US$3.2 billion in interest over 10 years to service 1MDB debt.
The dispute currently centres on Goldman Sachs’ attempt to offset the fine imposed on AMMB Holdings Bhd (AmBank; RM2.8 billion), as well as the settlement agreement with IPIC (US$1.8 billion), as part of the US$1.4 billion asset recovery guarantee.
Goldman Sachs contends that its obligations under the asset recovery guarantee were discharged through the fine and settlement.
However, the Malaysian government disputes this and asserts that the fine imposed on AmBank and the settlement with IPIC are not encompassed within the scope of the US$1.4 billion asset recovery guarantee. – March 1, 2024
