The 1MBD asset recovery taskforce are probing on whether negotiators and lawyers representing the Malaysian government botched their duties in the settlement agreement with Goldman Sachs.
“Such lapses on the part of negotiators and lawyers, in failing to negotiate a fair and clear settlement agreement have compromised the government of Malaysia’s position in the ongoing dispute,” the 1MDB taskforce chairman Datuk Seri Johari Abdul Ghani said in a statement today.
He also revealed that the taskforce is considering to initiate legal proceedings against foreign banks that facilitated fund transfers linked to 1MDB without conducting Know Your Client (KYC) processes.
The above two mentioned decisions were made after the taskforce held a meeting yesterday that discussed the latest update on asset recovery.
Goldman Sachs has filed a request for arbitration with the London Court of International Arbitration (LCIA) on Oct 11, 2023 in a bid to offset fines imposed on other institutions as part of its US$1.4 billion asset recovery guarantee.
The settlement agreement signed on August 2020 between the government of Malaysia and Goldman Sachs required Goldman Sachs to pay US$$2.5 billion cash payment and provide the government of Malaysia with a US$$1.4 billion asset recovery guarantee.
Goldman Sachs claims that its obligations under the asset recovery guarantee have been discharged through the fines imposed on AmBank Group (RM2.8 billion) and the settlement agreement with International Petroleum Investment Co (US$$1.8 billion).
“However, the government of Malaysia disputes this, and asserts that the fines imposed on AmBank and the settlement with IPIC are not encompassed within the scope of the US$$1.4 billion asset recovery guarantee, Johari said, reported Business Times.
1MDB paid extremely high advisory fees of US$606 million to Goldman Sachs for advising on the issuance of three bonds totalling US$6.5 billion.
Goldman Sachs’ direct involvement in the 1MDB scandal resulted in it being fined by various regulators, including the Department of Justice (DOJ), for the sum of US$$2.9 billion.
The amount paid by Goldman Sachs in fines was more than the cash payment paid to the government of Malaysia (US$$2.5 billion), even though Malaysia suffered from the 1MDB scandal.
Malaysia has to pay USD$6.5 billion (principal amount) and interest of US$3.2 billion over the span of 10 years, to service 1MDB debt.
The government of Malaysia filed its reply to Goldman Sachs’ arbitration request on Nov 8, 2023 and are currently in the process of agreeing on the procedural timetable.