American investment bank Goldman Sachs has reportedly agreed to pay $3.9 billion to the Malaysian government to settle all of the claims against it related to the 1Malaysia Development Berhad (1MDB) scandal. The bank had been accused of being directly involved in the massive corruption scandal that saw the theft of a reported $4.5 billion from the country's sovereign wealth fund.
As part of the deal, the Malaysian government had reportedly agreed to drop all criminal and regulatory charges against Goldman Sachs. This includes the halting of all proceeding against Goldman Sachs' subsidiaries and its current and former directors.
Malaysia initially filed charges against Goldman Sachs and two of its former employees back in 2018. A year later, the country filed additional charges against 17 of the bank's former and current employees, including several charges against its chief executive officer, Richard Gnodde.
During that time, Goldman Sachs had denied that it was directly involved in the scandal. The bank stated that the charges were "misdirected" and that it would be defending itself "vigorously" in court. So far, two former Goldman Sachs employees, Roger Ng and Tim Leissner, have pleaded guilty to money laundering charges filed by the U.S. Justice Department. The settlement will not cover both employees' cases.
According to Goldman Sachs, it will first be making payment of $2.5 billion to the Malaysian government, which will then be followed by an issuance of a guarantee that it will be providing "at least $1.4 billion" from the liquidation of assets acquired from the country's sovereign wealth fund seized by authorities and regulators worldwide.
Malaysia's Minister of Finance, Tengku Dato' Sri Zafrul Aziz, mentioned in a statement that the settlement should see the return of funds that rightly belong to 1MDB and consequently to the Malaysian people. According to the U.S. Justice Department, Goldman Sachs's involvement in the scandal, through its underwriting and management of bond sales, was limited but its actions had eventually led to billions of dollars being stolen.
After a lengthy investigation into the complicated plot to siphon money out of the sovereign wealth fund to the bank accounts of former Malaysian Prime Minister Najib Razak, Malaysian businessman Jho Low was finally identified as the mastermind. Authorities have managed to arrest and charge Razak, with a verdict expected to be issued this week. Meanwhile, Low still remains at large and authorities from both the U.S. and Malaysia are conducting a worldwide manhunt. Low is believed to be in hiding in Wuhan, China.
