American investment bank Goldman Sachs announced Friday it has reached a $3.2 billion settlement with the Malaysian government for its role in the multi-billion dollar 1MDB corruption scandal.
Goldman Sachs Group, Inc. (NYSE: GS) in an announcement on July 24 agreed to pay $ 2.5 billion to the Malaysian government in exchange for dropping criminal charges for its alleged role in the 1Malaysia Development Berhad or 1MDB corruption scandal.
The Wall Street Bank also guaranteed recovery of around $1.4 billion in proceeds from assets seized by governmental authorities around the world.
From its headquarters in New York, Goldman Sachs announced they have reached the agreement in principle to resolve all the criminal and regulatory proceedings in Malaysia involving the bank including some of its executives.
Malaysian Finance Minister Tengku Dato’ Sri Zafrul Aziz in a statement said the settlement represents assets that rightfully belong to the Malaysian people.
“We are also glad to be able to resolve this outside the court system, which would have cost a lot of time, money, and resources. With this settlement, we will have the return of the monies expedited, and not held up by lengthy and costly court battles and legal process,” the Malaysian finance minister said.
According to the Malaysian Ministry of Finance, Friday’s settlement, and monies recovered from the U.S. Department of Justice totaling more than $4.5 billion will be returned to the people of Malaysia.
Goldman Sachs, at their cost, will also assist the Malaysian government by appointing an asset recovery specialist to recover other related assets currently lying outside Malaysia.
The settlement is a score for the new administration of Prime Minister Muhyiddin Yassin according to the Ministry of Finance compared to the previous offer of $1.75 billion made by the bank to the previous administration in 2019.
How did Goldman Sachs got involved in the 1MDB scandal?
The involvement of two former bank employees to the multibillion-dollar 1MDB scandal is probably one of the worst scandals Goldman Sachs had to face in history.
Goldman Sachs bankers were accused in helping the alleged mastermind financier Low Taek Jho or Jho Low in allegedly siphoning billions of dollars of the 1MDB sovereign wealth fund intended to develop the Malaysian economy.
Jho Low was also accused of extravagantly spending the money, raised in the form of bond deals facilitated by Goldman Sachs, in buying artwork, real estate, a $250 million yacht, a private jet, and in funding the Martin Scorsese film “The Wolf of Wall Street.”
The scandal set a global investigation that hugely played in the defeat of former Malaysian Prime Minister Najib Razak who was also accused of channeling $700 million from the 1Malaysia Development Berhad Company to his personal accounts.
The Malaysian Ministry of Finance said the settlement by the American bank represents its acknowledgment of the misconduct of its two former employees, Tim Leissner and Roger Ng, in the broader 1MDB fraudulent and corruption scheme.
Malaysian officials, however, stressed the settlement will not affect Malaysia’s claims against Low and other parties related to the scandal.
