US banking giant Goldman Sachs has reached an agreement with the government of Malaysia to resolve all the criminal and regulatory proceedings in the country relating to the firm and 1Malaysia Development Berhad (1MDB).
The sovereign wealth fund was at the centre of a money laundering scandal which saw assets funnelled through financial institutions in several jurisdictions; including the US, Switzerland, Singapore and Luxembourg.
The bank has agreed to pay the government of Malaysia $2.5bn (£1.95bn, €2.14bn) and guaranteed that it will receive at least $1.4bn in proceeds from assets related to 1MDB seized by governmental authorities around the world.
In exchange, pending criminal charges will be withdrawn and it has been agreed that no further charges would be brought against Goldman Sachs, its subsidiaries, or any of its directors, officers and employees (excluding former employees Tim Leissner and Roger Ng) related to 1MDB.
Significant risk exposure
Goldman Sachs said in a statement on 24 July: “In connection with the guarantee, Goldman Sachs performed valuation analysis on the relevant assets and believes, based on that analysis, that the guarantee does not present a significant risk exposure to the firm.
“The agreement in principle does not resolve the other pending governmental and regulatory investigations involving the firm relating to 1MDB.”
This settlement comes months after the US Department of Justice (DOJ) repatriated around $300m to Malaysia in funds misappropriated from 1MDB.
Combined with other sums that the department transferred to Malaysia in May 2019, the US has returned or assisted in recovering over $600m of money misappropriated from the sovereign wealth fund.
