1MDB taskforce: Goldman Sachs legal proceedings 'premature'

 

The special taskforce to recover 1MDB assets was "surprised" by Goldman Sachs' "premature" move to initiate arbitration proceedings against Malaysia.

This was because both parties were currently in the "good faith discussion" stage over Goldman Sach's obligation over a US$250 million interim payment.

"The 1MDB Taskforce Committee (Asset Recovery) is quite surprised at the conduct of Goldman Sachs as parties are still in the stage of good faith discussions to resolve any dispute amicably.

"However, in light of recent events, the government of Malaysia will be preparing to respond to this matter and ensuring that this process is done diligently and in accordance with the established legal frameworks while ensuring that the interest of the Malaysian people is safeguarded," said taskforce chief Johari Abdul Ghani.

Johari (above), who is also the Titiwangsa MP, said Goldman Sachs was obliged to pay the US$250 million on Aug 18, 2022. Following this, Putrajaya had agreed to extend the deadline four times.

Each extension was for a three-month period and the latest and fourth extension was set to expire on Nov 8.

Johari explained that this meant that the parties were still in the "good faith discussion" stage and that Putrajaya, as the aggrieved party, viewed Goldman Sachs' initiation of the arbitration process as "premature and without due consideration of necessary prerequisites".

"Goldman Sachs' action of initiating arbitration proceedings also appears 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," he said.

Three bonds

In 2018, the Dr Mahathir Mohamad-led administration had filed a suit to seek US$3.3 billion from Goldman Sachs over its role in the 1MDB affair.

Goldman Sachs had arranged three bonds worth US$6.5 billion for 1MDB and the funds were mostly pilfered.

Following this, the Muhyiddin Yassin administration reached a settlement with Goldman Sachs on Aug 18, 2020, to which the latter agreed to pay US$2.5 billion within 10 days and guarantee US$1.4 billion for an asset recovery programme.

Johari said under the settlement, if Malaysia did not recover US$500 million in assets by Aug 18, 2022, Goldman Sachs would be obliged to pay US$250 million as interim payments.

"On Aug 18, 2022, the accounting provided by the government of Malaysia to Goldman Sachs showed that it had not recovered US$500 million and hence the government of Malaysia is entitled to the interim payment of US$250 million.

"This was disputed by Goldman Sachs," he said.

Goldman Sachs has been taken to court by several jurisdictions over the 1MDB affair. The company has paid fines or settlements to Hong Kong, Singapore and the US, among others.