Goldman Sachs revisits $5 billion 1MDB scandal settlement with Malaysia

Goldman Sachs Group Inc (NYSE:GS). is revisiting its settlement over the 1MDB investment fund scandal with Malaysia, according to Malaysian Prime Minister Anwar Ibrahim. The bank, based in New York, has struggled to put the scandal to rest even three years after agreeing to pay over $5 billion for its role in the misappropriation of Malaysia's 1MDB investment fund.

Behind the scenes, Goldman Sachs executives have been making fresh overtures to resolve one of the most embarrassing episodes in the bank's history. This comes after Anwar recently stated that he might consider taking Goldman Sachs to court due to disagreements related to the deal sealed by the previous government.

In a conversation with Bloomberg News during his visit to New York for the United Nations General Assembly, Anwar struck a more conciliatory tone. He suggested that a settlement was possible as they were not unreasonable and wanted what was fair. He also stated that while it would not be fair to reassess the entire deal, there were specific areas where flaws existed that needed attention.

The 1MDB fund became the center of a multi-billion dollar scandal that led to investigations across continents. After striking an initial agreement in 2020, Goldman admitted its role in the biggest foreign bribery case in U.S. enforcement history. The bank reached multiple international settlements exceeding $5 billion for its part in raising funds for 1MDB.

As part of the 2020 settlement, Goldman Sachs made an initial payment of $2.5 billion and guaranteed the return of $1.4 billion of 1MDB assets seized by authorities worldwide in exchange for Malaysia dropping charges against the bank. According to Goldman Sachs, an interim payment of $250 million was required if Malaysia did not receive at least $500 million in assets and proceeds by August 2022. This has led to a dispute between the two parties, which Goldman Sachs has made public in its filings.

The latest discussions only concern the asset-valuation dispute, according to a Goldman Sachs spokesperson. Despite the ongoing negotiations, Anwar warned Goldman Sachs against assuming that the threat of a lawsuit was a bluff. He stated that while the legal fees were manageable for the government, the integrity of Goldman Sachs was in question.

Anwar also mentioned that Malaysia is making efforts to repatriate former Goldman banker Roger Ng, who was sentenced in the U.S. to 10 years in prison over his role in the scandal. He believes that Ng could provide significant assistance in their investigations.

The Malaysian government has expressed dissatisfaction with the existing deal and Goldman's approach to it. Anwar highlighted two main issues: the quantum and interpretation of some clauses. He suggested that he could get personally involved if needed, but doesn't see the need for it at this stage, expressing confidence in his competent team.

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