Goldman Sachs has reached a $3.9 billion settlement deal with Malaysia over its role in the massive 1MDB financial scandal, officials said Friday. The American investment bank agreed to pay $2.5 billion in cash and guaranteed the recovery of at least $1.4 billion in assets stemming from three bond sales tied to the embezzlement scam, …
Goldman Sachs has reached a $3.9 billion settlement deal with Malaysia over its role in the massive 1MDB financial scandal, officials said Friday.
The American investment bank agreed to pay $2.5 billion in cash and guaranteed the recovery of at least $1.4 billion in assets stemming from three bond sales tied to the embezzlement scam, Malaysia’s Ministry of Finance announced.
The Malaysian government will also drop all pending criminal charges against Goldman and won’t try to prosecute any more of its subsidiaries or employees, the bank said in a statement.
“This settlement represents assets that rightfully belong to the Malaysian people,” Malaysian finance minister Tengku Dato’ Sri Zafrul Aziz 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.”
Malaysian officials confirmed that the settlement will “resolve outstanding charges and claims” related to the bond transactions that Goldman arranged for 1MDB. The finance ministry noted that the deal was significantly larger than the $1.75 billion that Goldman offered to pay last year.
“Today’s settlement is an important step towards putting the 1MDB matter behind us and will help enable the Malaysian government to move forward with additional recovery efforts and to execute on its economic priorities,” Goldman said. “There are important lessons to be learned from this situation, and we must be self-critical to ensure that we only improve from the experience.”
Malaysian prosecutors had accused three Goldman units of misleading investors about the bond sales that raised $6.5 billion for 1MDB — a state development fund formally known as 1Malaysia Development Berhad — and netted the bank about $600 million in fees.
The US Justice Department has said some $4.5 billion — including some of the money Goldman helped raise — was looted from 1MDB by people including playboy financier Jho Low, who is still on the lam.
Goldman has also reportedly held settlement talks with federal prosecutors that could see it pay $2 billion over its role in the scandal and have one of its units plead guilty under American bribery laws.
The bank has already seen some former employees face punishment over the alleged scam. Senior banker Tim Leissner has pleaded guilty and been barred by the feds from working in the industry, and Roger Ng is reportedly working on a plea deal in the US while awaiting trial in Malaysia.
The Federal Reserve also banned ex-Goldman partner Andrea Vella, who played a big role in the bank’s Asian operations, from the banking industry in February over the 1MDB deals.
Goldman shares were up about 1.4 percent in premarket trading following the settlement news to $205.96 as of 7:28 a.m.
With Post wires