KUALA LUMPUR: The 1Malaysia Development Bhd (1MDB) Asset Recovery Task Force is considering taking legal action against several foreign banks that facilitated fund transfers related to 1MDB without proper know your client (KYC) processes at the time.
The chairman Datuk Seri Johari Abdul Ghani stated that the task force is determined to address the 1MDB matter transparently and hold all parties accountable.
“The complexities of the settlement agreement require careful examination, and the task force is actively participating in the arbitration process to ensure a fair resolution in the best interests of the Malaysian people,” he said in a statement on Tuesday (Jan 23).
Johari said the task force is also investigating whether the negotiators and lawyers representing the Malaysian government at the time may have been negligent in arriving at the settlement agreement with Goldman Sachs Group Inc. He mentioned that the settlement received from Goldman Sachs was not adequate, putting Malaysia in a compromising position.
According to Johari, the settlement agreement signed in August 2020 between the government and Goldman Sachs required the company to pay US$2.5 billion (RM11.83 billion at current exchange rates) and provide the government with a US$1 billion (RM6.63 billion) asset recovery guarantee.
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Meanwhile, Johari said the government had filed its reply on Nov 8 to Goldman Sachs’ arbitration request, and the parties are currently in the process of agreeing on the procedural timetable.
The statement noted that 1MDB paid unusually high advisory fees of US$606 million (RM2.86 billion) to Goldman Sachs for advising on the issuance of three bonds totaling US$$6.5 billion (RM30.77 billion).
Goldman Sachs’ direct involvement in the 1MDB scandal has resulted in fines imposed by various regulators, including the US Justice Department, totaling US$2.9 billion (RM13.73 billion).
Notably, the amount paid by Goldman Sachs in fines surpassed the US$2.5 billion cash payment to the government of Malaysia, despite the country suffering the greatest repercussions from the 1MDB scandal by having to pay US$6.5 billion (principal amount) plus interest of approximately US$3.2 billion (RM15.15 billion) over 10 years to service the 1MDB debt.
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The current dispute revolves around Goldman Sachs’ attempt to offset the fine imposed on AMMB Holdings Bhd (Ambank; RM2.8 billion) and the settlement agreement with International Petroleum Investment Company (IPIC) (US$1.8 billion, or RM8.52 billion) against the US$1.4 billion asset recovery guarantee. Goldman Sachs claims that its obligations under the asset recovery guarantee have been fulfilled through this offset. However, the government disputes this and asserts that the fines imposed on Ambank and the settlement with IPIC are not included in the scope of the asset recovery guarantee. – Bernama
