KUALA LUMPUR – 1Malaysia Development Bhd (1MDB) task force chairman Datuk Seri Johari Abdul Ghani has accused global financial giant Goldman Sachs of attempting to draw attention away from its obligations under a settlement agreement by initiating a suit against Malaysia.
In a statement today, Johari said that the 1MDB task force committee is “quite surprised” at Goldman Sachs’ conduct, as parties are still in the stage of good faith discussions to resolve any dispute amicably.
“At this juncture, parties are still considered to be in the stage of amicable good faith discussions. As an aggrieved party, the 1MDB task force views Goldman Sachs’ initiation of arbitration proceedings as premature and without due consideration of the necessary prerequisites.
“(The initiation of arbitration proceedings) also appears to be an attempt to detract and divert attention away from Goldman Sachs’ obligation to adhere to the interim payment of US$250 million (RM1.18 billion) required under the settlement agreement,” Johari said.
He added that the government will be preparing to respond to this matter and ensure that the process is done diligently in accordance with established legal frameworks while safeguarding the interests of Malaysians.
Earlier today, Bloomberg reported that Goldman Sachs had taken the “unusual step” of filing for arbitration against the Malaysian government for allegedly violating conditions outlined in the settlement agreement.
The step follows executives at the investment bank growing “increasingly frustrated” with Malaysia’s demands to redo the existing agreement in favour of heavier penalties and a supposed lack of information over 1MDB assets recovered by the nation.
Goldman Sachs’ move also comes less than a month after Prime Minister Datuk Seri Anwar Ibrahim issued a cautionary message to Goldman Sachs, warning the financial firm that legal action will be taken if it fails to honour its settlement with the Malaysian government.
“They (Goldman Sachs) are taking us for granted, they think that we’ll not proceed (with a suit),” Anwar was quoted as saying in an interview with Bloomberg.
“There’s nothing for us to lose except for the legal fees, which a government can manage. But it’s also the integrity of Goldman Sachs that’s in question.”
Meanwhile, Johari also furnished details on the settlement agreement with Goldman Sachs.
The agreement, he said, was signed on August 18, 2020, and consists of two parts: a cash payment of US$2.5 billion paid 10 days after signing and an asset recovery guarantee of US$1.4 billion by Goldman Sachs within five years from the date of the agreement.
“Under the US$1.4 billion asset recovery guarantee by Goldman Sachs, if the Malaysian government did not recover the sum of US$500 million by August 18, 2022, Goldman Sachs would be required to pay US$250 million as an interim payment to the Malaysian government.
“On August 18, 2022, the accounting provided by the Malaysian government to Goldman Sachs showed that it had not received US$500 million, hence, the government is entitled to the US$250 million interim payment. This was disputed by Goldman Sachs,” Johari said.
He added that four separate extensions were granted to Goldman Sachs by the government here upon expiry of the initial August 18, 2022, deadline.
The latest extension is set to expire on November 8. If a settlement is not reached between the parties by this deadline, the government can commence arbitration proceedings in respect of the US$250 million interim payment.
It was previously reported that Goldman Sachs had helped raise US$6.5 billion for 1MDB, with more than US$4.5 billion stolen from the sovereign wealth fund by high-level officials at the fund and their associates between 2009 and 2015. – October 12, 2023