KUALA LUMPUR: The 1Malaysia Development Bhd (1MDB) Asset Recovery Task Force is considering legal proceedings against several foreign banks that facilitated fund transfers related to 1MDB without conducting proper know your client (KYC) processes at the material time.
Its chairman Datuk Seri Johari Abdul Ghani said the task force is firmly committed to addressing the 1MDB matter transparently and holding all parties accountable.
“The complexities of the settlement agreement require careful examination, and the task force is actively participating in the arbitration process to ensure a fair resolution in the best interests of the Malaysian people,” he said in a statement on Tuesday (Jan 23).
Johari said the task force is also looking into whether or not the negotiators and lawyers representing the Malaysian government at the material time may have failed in their fiduciary duty or were negligent in arriving at the settlement agreement.
He said it has been noted that they had not secured fair and adequate settlement from Goldman Sachs Group Inc.
“Such lapses on the part of negotiators and lawyers… have compromised the government of Malaysia’s position in the ongoing dispute,” he said.
According to Johari, the settlement agreement signed in August 2020 between the government and Goldman Sachs required the company to pay US$2.5bil billion (RM11.83bil at current exchange rates) and provide the government with a US$1.bil (RM6.63bil) asset recovery guarantee.
Meanwhile, Johari said the government had filed its reply on Nov 8 to Goldman Sachs’ arbitration request and the parties are currently in the process of agreeing on the procedural timetable.
The statement noted that 1MDB paid unusually high advisory fees of US$606mil (RM2.86bil) to Goldman Sachs for advising on the issuance of three bonds totalling US$$6.5bil (RM30.77bil).
Goldman Sachs’ direct involvement in the 1MDB scandal has resulted in it being fined by various regulators, including the US Justice Department, for the sum of US$2.9bil (RM13.73bil).
Notably, the amount paid by Goldman Sachs in fines surpassed the US$2.5bil cash payment to the government of Malaysia, despite the country suffering the greatest repercussions from the 1MDB scandal by having to pay US$6.5bil (principal amount) plus interest of approximately US$3.2bil (RM15.15bil) over 10 years to service the 1MDB debt.
The current dispute revolves around Goldman Sachs’ attempt to offset the fine imposed on AMMB Holdings Bhd (Ambank; RM2.8 billion) and the settlement agreement with International Petroleum Investment Company (IPIC) (US$1.8bil, or RM8.52bil) against the US$1.4bil asset recovery guarantee.
Goldman Sachs contends that its obligations under the asset recovery guarantee have been discharged through this offset.
However, the government disputes this and asserts that the fines imposed on Ambank and the settlement with IPIC are not encompassed within the scope of the asset recovery guarantee.