Goldman Sachs takes legal battle to UK Court in 1MDB dispute with Malaysia

SHAH ALAM - Goldman Sachs Group Inc has taken a surprising step by suing Malaysia in a United Kingdom court over an ongoing dispute regarding the 1Malaysia Development Berhad (1MDB) investment-fund scandal settlement.

The disagreement centred on Malaysia's demands for more stringent penalties and the lack of transparency in recovered assets.

A representative from the New York-based bank revealed to Bloomberg of their action, explaining that the filing for arbitration against the government of Malaysia was due to the latter’s violations of obligations.

"We filed for arbitration against the Government of Malaysia for violating its obligations to properly credit assets as per our settlement and to recover other assets,” a spokesman for the New-York-based bank said in an emailed statement.

Goldman Sachs had apparently grown frustrated with Malaysia's insistence on revising their 2020 agreement and the lack of clarity regarding the recovered assets only added to the tension.

The lawsuit was officially filed in the London International Court of Arbitration, yesterday (Oct 11).

The 1MDB scandal, a multi-billion-dollar debacle that led to investigations worldwide, continued to create legal and financial turbulence.

It was reported that Goldman Sachs previously admitted its role in the largest foreign bribery case in U.S. enforcement history. This admission led to multiple international settlements exceeding $5 billion (RM23.61 billion) for its involvement in raising funds for 1MDB.

Under the 2020 settlement with Malaysia, Goldman Sachs initially paid $2.5 billion (RM11.81 billion) and agreed to ensure the return of $1.4 billion (RM6.61 billion) in seized 1MDB assets.

In exchange, Malaysia dropped criminal charges and committed not to initiate new ones.

Goldman Sachs was also reported to have made a $250million (RM1.18 billion) interim payment if Malaysia did not receive $500 million (RM2.36 billion) in assets and proceeds by August 2022, according to the settlement.

A dispute arose over this provision, leading to threats from Malaysia to sue Goldman unless the settlement terms were renegotiated.

"They are taking us for granted, they think that we'll not proceed.

"There's nothing for us to lose except for the legal fees, which a government can manage. But it's also the integrity of Goldman Sachs that's in question,” Prime Minister Datuk Seri Anwar Ibrahim said last month.