Vague 1MDB deal allowed Goldman Sachs to escape responsibilities, says Johari
Published on: Friday, March 01, 2024
By: FMT
.jpg "Vague 1MDB deal allowed Goldman Sachs to escape responsibilities, says Johari")
Johari Ghani said the recovery of 1MDB assets has been delayed due to ongoing arbitration proceedings but can be expedited if a settlement is reached.
Kuala Lumpur: Johari Ghani says a lack of clarity in an agreement entered between Putrajaya and Goldman Sachs in 2020 is allowing the bank to evade the full extent of its responsibilities to the government in the recovery of 1MDB assets.
The 1MDB asset recovery taskforce chairman said the New York based investment bank is taking advantage of ambiguities in the document to sidestep a US$1.4 billion asset recovery guarantee given to the government, Bernama reported.
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“In 2020, we signed an agreement where we were paid US$2.5 billion and were promised another US$1.4 billion (in the form of recovered assets). However, the agreement was not clear.
“It (Goldman Sachs) took advantage by refusing to pay the US$1.4 billion because it said that we had collected, through AmBank, a fine of US$640 million. Then, we received about US$430 million from the US Department of Justice (DoJ),” he was quoted as saying.
Johari said Goldmans Sachs had also attempted to offset the proceeds received from Malaysia’s settlement with the International Petroleum Investment Company (IPIC) against the recovery guarantee.
“We said no. The fines and the settlement do not come within the scope of the US$1.4 billion asset recovery guarantee. Hence, there is a dispute because the agreement is unclear,” he said.
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Johari added that the task force is in the process of pursuing arbitration to resolve the matter.
In October last year, Goldman Sachs commenced arbitration proceedings in a UK court over the settlement, accusing Malaysia of “violating its obligations to appropriately credit assets against the guarantee”, and for failing in its obligation to recover “other assets”.
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It also claimed the bank’s executives “had grown increasingly frustrated” with the government’s demands for the agreement to be reworked so that “more onerous penalties” could be imposed.
Johari had denounced this as the investment bank’s “attempt to divert attention away” from the bank’s obligation to make an interim payment of US$250 million to Putrajaya under the settlement agreement.
He said the agreement, signed on Aug 18, 2020, required Goldman Sachs to make payment in two parts – a cash payment of US$2.5 billion within 10 days, and a guarantee that assets worth US$1.4 billion will be recovered within five years.
Johari said the recovery of assets under the guarantee will take time, as it is now being contested in the arbitration proceedings. However, the resolution could be expedited if a settlement is reached, he added.
Malaysia is obligated to pay a principal amount of US$6.5 billion plus interest of approximately US$3.2 billion over the span of 10 years to service the 1MDB debt.
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