Goldman Sachs Sues Malaysia Over Push To Redo 1MDB Settlement

Goldman Sachs has sued Malaysia after the country pushed to redo a settlement over the US investment bank’s role in the 1MDB multi-billion dollar scandal, the bank said Thursday.

The 1MDB scandal led to investigations around the world, including in the United States, Switzerland and Singapore, into the use of their financial systems to launder money.

Under a 2020 settlement, Goldman paid Malaysia $2.5 billion for its role in the financial scandal, while Kuala Lumpur agreed to end all criminal proceedings against the bank.

Malaysian Prime Minister Anwar Ibrahim vowed in September to redo the settlement, saying “we are a small nation, but you can’t take us for a ride”.

Goldman has always denied any wrongdoing in the case.

The bank said in a statement on Thursday that it had “filed for arbitration against the Government of Malaysia for violating its obligations to appropriately credit assets against the guarantee provided by Goldman Sachs in our settlement agreement and to recover other assets”.

The suit was filed on Wednesday at the London Court of International Arbitration, a source familiar with the matter told AFP.

Malaysia was “quite surprised” by the legal action because both parties were still engaged in “good faith discussions to resolve any dispute amicably”, said Johari Abdul Ghani, head of a 1MDB taskforce seeking to recover the fund’s assets.

Malaysia will respond to ensure “that the interest of the Malaysian people is safeguarded,” he added.

Goldman’s involvement came under scrutiny over bond issues totalling $6.5 billion it helped arrange for 1MDB, with Malaysia claiming large amounts were misappropriated.

Cash plundered from state coffers bankrolled a global spending spree, and was used to buy everything from artwork to real estate and a superyacht.

Malaysia said Tuesday it was investigating former Goldman Sachs banker Roger Ng, who was returned to the country to help recover millions in assets after he was convicted in the United States in connection with the scandal.

A US court had already sentenced Ng to 10 years in prison in March but US officials allowed the jail sentence to be delayed so that Ng could assist Malaysia in the investigation.

Former Malaysian prime minister Najib Razak was ousted in 2018 and jailed for 12 years on corruption charges linked to the plunder.