Guan Eng: Has Putrajaya Been Short-Changed in Goldman Sachs Settlement?

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Lim Guan Eng today questioned if Malaysia has been short-changed in the US$3.9 billion (RM16.6 billion) settlement with Goldman Sachs.

In a statement, the DAP secretary-general asked if Prime Minister Muhyiddin Yassin was letting Goldman Sachs off lightly when Malaysia had earlier asked for US$7.5 billion for their criminal involvement in 1MDB, where two of its senior executives were charged by United States authorities and the Malaysian government had filed 17 criminal charges against Goldman Sachs.

The former finance minister said the Pakatan Harapan government had claimed US$7.5 billion to recover US$6.5 billion in the following three 10-year bonds arranged by Goldman Sachs guaranteed by Putrajaya:

  1. US$1.75 billion at a 5.99% interest rate issued on May 18, 2012
  2. US$1.75 billion at a 5.75% interest rate issued on October 17, 2012
  3. US$3 billion at a 4.4% interest rate issued on March 16, 2013

“The previous government had claimed US$7.5 billion from Goldman Sachs, to include the additional US$1 billion to cover interest cost incurred for the bonds to date,” Lim said in the statement.

“The prime minister must come clean on whether out of the initial claim of US$7.5 billion by the federal government, Goldman Sachs is only paying US$2.5 billion cash with the remainder US$1.4 billion, not paid by the investment bank but recovered from stolen assets illicitly paid by 1MDB through the US Department of Justice.

“In other words, Goldman Sachs is only paying US$2.5 billion in cash.”

By forgoing the initial US$7.5 billion claim, Lim said the government has ignored the huge debt burden of 1MDB.

“The total outstanding 1MDB debt guaranteed by the government is RM31.7 billion. If the remaining interest payments until 2038 are included, the amount would increase to RM41.5 billion.

“This sum excludes the RM8.9 billion that have already been paid by the government. This would bring the total cost to the country, including interest of the 1MDB debts, to RM50.4 billion.

“Even if it is not the full US$7.5 billion claim, the settlement should be at least US$6.5 billion that Goldman Sachs was responsible for raising the three bonds.

“The prime minister should assure the public he has not sold Malaysians short or allowed Goldman Sachs to get off too lightly for their involvement in one of the largest financial scandals in history – the RM50.4 billion 1MDB scandal.”

Goldman Sachs will hand over a cash payment of US$2.5 billion to Putrajaya, under a settlement the two sides reached yesterday, in the next two months.

Finance Minister Tengku Zafrul Tengku Abdul Aziz said the payment is part of the settlement sum of US$3.9 billion to resolve outstanding charges and claims related to three bond transactions that the US investment bank arranged for 1MDB.

The balance of US$1.4 billion will be paid after assets bought using misappropriated funds are returned to Malaysia. – TMI