Goldman Sachs settles with Malaysia, will pay $3.9B over sprawling 1MDB corruption case
The settlement sees criminal charges against Goldman dropped
U.S. investment bank Goldman Sachs has reached a $3.9 billion US settlement with the Malaysian government over the multibillion-dollar 1MDB scandal, the two sides said on Friday.
The deal includes a $2.5 billion cash payout by Goldman and a guarantee by the bank to return at least $1.4 billion in assets linked to 1MDB bonds, Malaysia's finance ministry said in a statement.
"We are confident that we are securing more money from Goldman Sachs compared to previous attempts, which were far below expectations," Finance Minister Tengku Zafrul Aziz said in a statement.
"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," he said.
The deal would resolve all outstanding charges and claims against Goldman Sachs, he said.
U.S. and Malaysian authorities say about $4.5 billion was stolen from 1MDB in an elaborate scheme that spanned the globe and implicated former Malaysian prime minister Najib Razak and Goldman staff and others.
U.S. prosecutors said the money was used to buy artwork, including paintings by Vincent Van Gogh and Claude Monet, luxury properties in New York and London and to fund the Wolf of Wall Street movie.
Malaysian prosecutors filed charges in December 2018 against three Goldman Sachs units for misleading investors over bond sales totalling $6.5 billion that the bank helped raise for sovereign wealth fund, the 1Malaysia Development Berhad.
Former PM hears verdict in case next week
Goldman Sachs has consistently denied wrongdoing, saying that certain members of the former Malaysian government and 1MDB lied to it about how proceeds from the bond sales would be used. The units of Goldman Sachs had pleaded not guilty to the criminal charges.
Goldman Sachs confirmed the settlement and said it had reached an agreement in principle with Malaysia to resolve all criminal and regulatory proceedings in the country involving the firm.
Its shares rose about 0.87 per cent in early market trading as investors were cautiously optimistic about the bank resolving one part of its ties to the scandal.
However, the bank still faces an investigation by the U.S. Department of Justice (DOJ), which is reportedly looking into violations of the U.S. Foreign Corrupt Practices Act. The law makes it illegal to pay foreign government officials in order to secure their help in getting or keeping business.
A Malaysian court will deliver its verdict in the case against Najib on Tuesday, the first of several corruption trials he faces linked to the 1MDB scandal.
Najib has denied any wrongdoing and pleaded not guilty to all the charges against him.
Financier Low Taek Jho, or Jho Low, who was seen as pivotal in promoting the fund and is listed among the producers of the 2013 film The Wolf of Wall Street, remains a fugitive in the case.