KUALA LUMPUR, Malaysia — The Malaysian government has expressed concerns regarding the recent decision by Goldman Sachs to file for arbitration in a dispute related to the massive looting of a sovereign wealth fund.
Johari Abdul Ghani, who leads a task force responsible for recovering assets lost from the fund known as 1MDB, stated that it is premature for arbitration at this stage since ongoing discussions are still in progress to resolve the conflict. He further accused the U.S. bank of attempting to divert attention from its payment obligations.
Goldman Sachs previously paid Malaysia $2.5 billion in 2020 to settle criminal charges associated with the 1MDB saga. As part of the agreement, the bank also pledged to assist in recovering $1.4 billion in 1MDB assets, including $500 million due by August 2022. In the event of non-compliance, Goldman Sachs was to pay an interim amount of $250 million. However, the parties currently differ on this interim payment issue.
Malaysia asserts that Goldman Sachs failed to recover the agreed-upon amount last year and thus is liable for the $250 million payment. The bank, on the other hand, disagrees with this claim.
Johari highlighted that the government has granted multiple extensions to the negotiation deadline. If a settlement is not reached by November 8, Malaysia could proceed with arbitration proceedings.
“At this juncture, while the parties are still considered to be in the amicable good faith discussions stage, Goldman Sachs’ initiation of arbitration proceedings is viewed by the 1MDB task force as premature,” Johari mentioned in a statement.
Malaysia’s Commitment to Legal Frameworks and Public Interest
The 1MDB scandal, which involved the misappropriation of more than $4.5 billion from a fund set up by former Malaysian leader Najib Razak, has had far-reaching consequences. Funds were illicitly used to finance extravagant purchases such as yachts, real estate, and even the production of the movie “The Wolf of Wall Street.”
As a result of this scandal, Najib faced defeat in the 2018 general elections and subsequently began serving a 12-year prison sentence after failing to appeal his conviction on multiple corruption charges related to 1MDB. Meanwhile, a key figure in the plot, Malaysian financier Low Taek Jho, remains a fugitive with international status.
In 2012 and 2013, Goldman Sachs orchestrated $6.5 billion worth of bonds for the 1MDB fund, earning more than $600 million in fees. Roger Ng Chong Hwa, one of the former Goldman bankers involved in the case, received a 10-year jail sentence in March. However, his prison term has been temporarily suspended as he is being repatriated to Kuala Lumpur to assist in the recovery of 1MDB assets.
Another former Goldman Sachs employee, Tim Leissner, admitted guilt in 2018 for bribing government officials in Malaysia and the United Arab Emirates. He was ordered to pay a sum of $43.7 million and subsequently became a crucial government witness during Ng’s trial, which lasted two months. However, Leissner has not yet been sentenced.
Upholding Legal Frameworks and Public Interest
Malaysia is firmly committed to upholding established legal frameworks and safeguarding the interests of its people. Johari, a prominent figure involved in addressing the aftermath of the 1MDB scandal, reiterated this commitment without providing further details.
The embezzlement of over $4.5 billion from the 1MDB fund, initially established by former Malaysian leader Najib Razak for economic development projects, has had far-reaching implications. These illicit funds were subsequently laundered, enabling lavish purchases such as yachts, real estate, and even funding the production of the film “The Wolf of Wall Street.”
This scandal played a significant role in Najib’s defeat in the 2018 general elections. Subsequently, he received a 12-year prison sentence after failing in his appeal against his conviction on multiple charges related to 1MDB. Notably, Low Taek Jho, the alleged mastermind behind the scheme, has yet to be apprehended and remains an international fugitive.
Goldman Sachs played a pivotal role in the orchestration of $6.5 billion in bonds for the 1MDB fund between 2012 and 2013. In return, the bank earned over $600 million in fees. Roger Ng Chong Hwa, one of the former Goldman bankers implicated in the case, received a 10-year prison sentence in March. However, his incarceration has been temporarily paused to facilitate his return to Kuala Lumpur, where he will assist in efforts to recover 1MDB assets.
Similarly, Tim Leissner, Ng’s superior at Goldman Sachs, pleaded guilty in 2018 to bribing government officials in Malaysia and the United Arab Emirates. Consequently, he was ordered to pay $43.7 million and emerged as a crucial government witness during Ng’s two-month-long trial. As of now, sentencing has yet to take place for Leissner.
