Malaysia could sue foreign banks for 1MDB transactions - Johari

 

Malaysia could initiate legal action against foreign banks that did not perform the ‘Know Your Client’ verification process properly, thus allowing 1MDB funds to flow into unintended accounts.

According to 1MDB taskforce chairperson Johari Abdul Ghani, at least eight foreign banks facilitated such transactions in several countries where 1MDB money has flowed.

“By right, we can initiate legal action against such banks which did not perform KYC properly.

“If the banks want to fight (the legal action), we can fight back, but if the amount involved is not too large, we usually consider an out-of-court settlement,” Utusan Malaysia reported Johari saying at an interview session with local TV stations last night.

He added that in such cases, the banks involved would usually not prefer their names being dragged into the 1MDB scandal.

Johari, who was recently appointed plantation and commodities minister, confirmed he will continue leading the 1MDB taskforce as there are “unsettled issues” in recovering 1MDB-related assets.

Elaborating, he said any legal action would be “Phase two” of recovery, with the first being settlement, such as the one established with Goldman Sachs Group.

“We are at a major recovery stage from Goldman Sachs. It’s just that there’s a dispute with the bank’s guarantee to pay US$1.4 billion (RM6.4 billion) in 1MDB assets recovered from around the world. It does not want to pay up.

“We have given four extensions, but it (Goldman) still does not want to pay. So, we have to take the case to arbitration,” Johari said.

Last October, Goldman Sachs filed legal action against Malaysia at the London Court of International Arbitration concerning the settlement agreement linked to the bank’s role in the 1MDB affair.

Both sides were embroiled in a dispute over a 2020 settlement agreement, whereby the bank agreed to pay US$3.9 billion (RM18.41 billion) to settle Malaysia’s criminal investigation over its role in the affair.

In a regulatory filing earlier this year, Goldman said it was also required to make a one-time interim payment of US$250 million if the Malaysian government had not received at least US$500 million in assets and proceeds by August last year.

Johari stressed that the taskforce was recovering 1MDB funds from several countries, but did not provide details on the exact amount. - Mkini