Key Highlights
- Goldman Sachs sues Malaysia, claiming breaches in the 1MDB settlement agreement, triggering international arbitration.
- The dispute centers around a $3.9 billion settlement and a disagreement over Malaysia’s recovery of assets, raising concerns about the broader 1MDB scandal resolution.
Goldman Sachs Group (GS.N) has taken legal action against Malaysia in a UK court, escalating tensions surrounding a settlement agreement related to the bank’s involvement in the massive 1MDB corruption scandal.
Goldman Sachs Sues Malaysia in UK Court
In response to Malaysia’s alleged failure to fulfill its obligations in the settlement agreement, Goldman Sachs initiated arbitration proceedings against the Government of Malaysia. The bank claims that Malaysia did not appropriately credit assets against the guarantee provided by Goldman Sachs, and it seeks to recover other assets.
These legal actions have been filed with the London Court of International Arbitration, according to sources, and were initially reported by Bloomberg News.
The 1MDB Scandal and Goldman Sachs’ Role
At the time of this report, the offices of Malaysian Prime Minister Anwar Ibrahim and the Attorney General’s Chambers had not issued a response to the lawsuit.
- This development comes on the heels of Anwar Ibrahim’s recent threat to take Goldman Sachs to court.
- The dispute revolves around a 2020 settlement agreement in which Goldman Sachs agreed to pay $3.9 billion to resolve Malaysia’s criminal investigation into its involvement in the 1MDB scandal.
- Additionally, Goldman Sachs committed to making a one-time interim payment of $250 million if the Malaysian government had not received at least $500 million in assets and proceeds by August 2022, as stated in a regulatory filing earlier this year.
However, discrepancies emerged between the two parties regarding whether Malaysia had successfully recovered at least $500 million by August 2022 and whether an interim payment was due, as indicated by Goldman Sachs.
Response from Malaysian Authorities
The 1MDB scandal involves allegations that approximately $4.5 billion was embezzled from the sovereign wealth fund through an elaborate global scheme.
- This scandal implicated high-ranking officials associated with the fund, including former Malaysian Prime Minister Najib Razak, as well as Goldman Sachs staff and others.
- Prosecutors contended that Goldman Sachs played a role in helping 1MDB raise $6.5 billion through bond sales and earned $600 million in fees.
Notably, the United States has been in the process of returning funds it recovered from assets allegedly purchased with embezzled 1MDB funds.
FAQs
1. What is the 1MDB settlement dispute between Goldman Sachs and Malaysia?
It’s a legal disagreement over the 2020 settlement in which Goldman Sachs agreed to pay $3.9 billion for its role in the 1MDB scandal.
2. Why has Goldman Sachs initiated legal action against Malaysia?
The bank claims Malaysia didn’t fulfill its obligations in crediting assets against the settlement guarantee, leading to a legal dispute.
3. Where has Goldman Sachs filed the arbitration?
The arbitration has been filed with the London Court of International Arbitration.
