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Goldman Sachs Under Malaysian Microscope

Goldman Sachs

Goldman Sachs Group (NYSE:GS) is under the Malaysian government’s close scrutiny, as they’ve submitted an arbitration request concerning a $3.9 billion settlement linked to the 1MDB corruption scandal.

Malaysia’s Accusation

Malaysia’s 1MDB task force deems the bank’s move as premature. Johari Abdul Ghani, the task force chairman, accuses Goldman of evading its interim payment obligation.

This legal action comes after Prime Minister Anwar Ibrahim’s threat to sue Goldman Sachs. The bank had earned $600 million in fees from two bond offerings that helped raise $6.5 billion for 1MDB.

Billions Stolen

Both the U.S. Justice Department and Malaysian authorities estimate that approximately $4.5 billion was embezzled from 1MDB between 2009 and 2014. This scandal involved a global scheme that implicated high-ranking government and banking officials.

On Thursday, the Attorney-General’s Chambers (A-GC) in Kuala Lumpur confirmed receiving Goldman Sachs’ arbitration request related to their multi-billion-dollar 1MDB settlement. Notably, this scandal had implicated former Prime Minister Datuk Seri Najib Razak and is also under scrutiny by U.S. prosecutors.

The A-GC firmly denies all allegations and commits to providing a legal response that prioritizes the interests of the Malaysian people.

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Goldman Sachs’ Settlement

In 2020, Goldman Sachs agreed to pay Malaysia $2.5 billion and return $1.4 billion in assets, resulting in dropped criminal charges. Thus, the government also sought the return of $600 million in fees earned by Goldman Sachs from bond sales linked to the 1MDB fraud scheme. In addition to, it led to Goldman Sachs admitting misconduct involving two former employees.

A dispute over a $250 million interim payment, related to an unrecovered $500 million, arose on August 18, 2022. However, the ongoing dispute has a deadline set for settlement by November 8, 2023, before Malaysia initiates arbitration proceedings.

1MDB Scandal Key Figures

The 1MDB scandal has implicated several key figures, including ex-Malaysian leader Najib Razak, who is currently serving a 12-year jail term. The embezzled funds were notably used to finance the film “The Wolf of Wall Street.” Low Taek Jho, the accused plot architect, remains an international fugitive. Thus, Ex-Goldman banker Roger Ng Chong Hwa, who was sentenced and repatriated to Kuala Lumpur for asset recovery. And his ex-boss Tim Leissner, ordered to pay $43.7 million. This is done after a guilty plea, are also prominent figures in this scandal.

In Summation

Goldman Sachs’ arbitration request is the latest development in the ongoing 1MDB scandal, attracting the attention of Malaysian authorities and sparking threats of legal action from Prime Minister Anwar Ibrahim. Furthermore, the dispute over the interim payment remains unresolved, and the specter of arbitration looms on the horizon. This scandal, with its high-profile figures, continues to cast a shadow over international finance and politics.

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