Goldman Sachs' $3 Billion Offer Not Enough To Settle Case Over 1MDB Scandal

Officials of Malaysia's new government have reportedly declined Goldman Sachs' offer of paying $3 billion to settle the investigation against it over its involvement in the 1MDB scandal. The country's finance minister had stated that the country is not willing to accept the bank's compensation, which is significantly higher than the amount it had offered last year.

Malaysia, through its former Prime Minister, Mahathir Mohamad, had reopened the investigation into the 1MDB scandal in 2018. Since then, the government has filed charges against Goldman Sachs along with 17 of its current and former directors. The Southeast Asian claims that the firm and its employees had misled investors on bond sales worth more than $6.5 billion through the country's sovereign wealth fund, the 1 Malaysia Development Bhd.

The country's new finance minister, Tengku Zafrul Aziz, revealed that Goldman Sachs had approached his office with the settlement offer last month. The minister mentioned in an interview at his office on Saturday that the legal case against Goldman Sachs is still ongoing and the country is still pursuing the case until in it completed.

He added that $2 billion or $3 billion is not an amount that Malaysia will be able to accept. The official declined to state how much exactly was needed for the country to drop its case. Goldman Sachs has also declined to comment on the matter. Back in December last year, Malaysian officials had commented that Goldman Sachs had made an offer of "one point something billion" as an out-of-court settlement for the government to drop its legal case against it.

 The 1MDB scandal initially centered around accusations that former Malaysian Prime Minister Najib Razak had funneled more than $700 million from the country's sovereign wealth fund to his personal bank account. Further investigations into the matter, which had eventually led to Razak's resignation, had unearthed the fund's substantial $11.73 billion debt, part of which was from a $3 billion state-guaranteed bond issued by Goldman Sachs in 2013.

According to the US Justice Department, Goldman Sachs is estimated to have earned more than $600 million in fees through its transactions with Malaysia's wealth fund. The company reportedly earned more than $300 million from the bond it issued in 2013. Goldman Sachs' involvement in the scandal has managed to besmirch its reputation globally, which is why it is actively trying to resolve the issue and settle the case outside of court to prevent any further damage to its image.