Goldman Sachs suing Malaysia in a UK court over 1MDB settlement amount.

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The Attorney-General’s Chambers (A-GC) today confirmed that it received a request for arbitration from the Goldman Sachs Group over a settlement agreement on the bank’s role in the multi-billion 1Malaysia Development Berhad (1MDB) financial scandal.

However, the A-GC refuted all the allegations made in the request for arbitration, stating that it provided an inaccurate representation of the government’s conduct.

“The A-GC will prepare its response within the confines of the law and reiterate that the interest of the Malaysian people is paramount,” it said in a statement.

In 2020, Goldman Sachs settled with Malaysia by agreeing to pay US$2.5 billion in cash and guaranteeing the return of US$1.4 billion in assets, in exchange for dropping all criminal charges against the bank.

The government also demanded the return of US$600 million Goldman Sachs had pocketed as fees.

Malaysian and US prosecutors have alleged that the bond sales organised by Goldman Sachs for 1MDB provided one of the means for associates of former prime minister Datuk Seri Najib Razak to steal billions over several years from the fund.

The settlement is also an admission by Goldman Sachs over the misconduct of two of its former employees in the 1MDB fraud and corruption scheme.

On Aug 18, 2022, the accounting provided by the government to Goldman Sachs showed that it had not recovered US$500 million, and hence the government is entitled to the interim payment of US$250 million.

This was disputed by Goldman Sachs.

Meanwhile, Goldman Sachs’ action of initiating arbitration proceedings may be an attempt to detract and divert attention away from their obligation to pay US$250 million (RM1.18 billion) as part of their previously agreed settlement, said 1Malaysia Development Bhd (1MDB) taskforce chairman Datuk Seri Johari Abdul Ghani.

He said that the task force committee was “quite surprised” at the firm’s conduct as they had believed they were still under good faith discussions to resolve any disputes amicably.

“However, in light of recent events, the government of Malaysia will be preparing to respond to this matter and ensuring that this process is done diligently and in accordance with the established legal frameworks while ensuring that the interest of the Malaysian people is safeguarded,” he said in a statement today.

Hari Anggara

Earlier today, it was reported that Goldman Sachs is suing Malaysia in a United Kingdom court over the settlement amount.

A spokesman for the firm said they filed for arbitration against Malaysia for violating its obligations to appropriately credit assets in the settlement agreement to recover assets.

The complaint was filed yesterday in the London International Court of Arbitration.