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Malaysia says Goldman Sachs suit 'premature' amid dispute over 1MDB settlement

KUALA LUMPUR: A Malaysian government task force said on Thursday (Oct 12) it viewed Goldman Sachs’ filing of arbitration proceedings as premature, after the firm sued Malaysia in a British court this week amid an escalating dispute over a 2020 settlement deal.

Goldman Sachs in 2020 had agreed to pay US$3.9 billion to settle Malaysia’s criminal probe over its role in the multi-billion dollar 1MDB corruption scandal.

But the parties are now in disagreement over the deal, which includes a stipulation for Goldman Sachs to make an interim payment if Malaysia did not recover at least US$500 million from the firm by August 2022.

Under the stipulation, Goldman Sachs would be required to pay US$250 million as interim payment to Malaysia. 

The country’s 1MDB task force said Goldman Sachs had requested an extension on a Nov 8 deadline for discussions to settle the dispute.

“At this juncture … parties are still considered to be in the amicable good faith discussions stage and therefore as an aggrieved party, the 1MDB Taskforce views Goldman Sachs’ initiation of arbitration proceedings as premature and without due consideration of necessary prerequisites,” 1MDB task force chairman Johari Abdul Ghani said in a statement.

He added that four separate extensions – the latest of which was given on Aug 8, 2023 – were granted to Goldman Sachs by Malaysia upon expiry of the initial August 2022 deadline “to try and amicably settle this dispute”. 

“The current deadline for the latest extension expires on Nov 8, 2023, and if a settlement is not reached between the parties by this deadline, the Government of Malaysia can commence arbitration proceedings in respect of the interim payment of US$250 million,” said Mr Johari. 

He added that the sequence of events are “important” as “to ensure that the public is fully informed on the current situation” regarding the Goldman Sachs settlement agreement.

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Mr Johari also accused Goldman of trying to distract from the interim payment, and said the Malaysian government would respond to the matter accordingly.

“Goldman Sachs’ action of initiating arbitration proceedings also appear to be an attempt to detract and divert attention away from their obligation to adhere to the interim payment of US$250 million requirement under the settlement agreement.

“Nevertheless, in relation to these proceedings, the Government of Malaysia will respond to this matter accordingly,” said Mr Johari. 

Goldman Sachs lodged its suit less than two months after Malaysian Prime Minister Anwar Ibrahim threatened to take the company to court.

Malaysian and US authorities estimate some US$4.5 billion were stolen from 1MDB between 2009 and 2014, in a globe-spanning scheme that implicated high-level government and banking officials in Malaysia and elsewhere.

Goldman had helped 1MDB raise US$6.5 billion in two bond offerings, earning itself US$600 million in fees, according to the US Justice Department.

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