Kristian Rouz – Malaysian Prime Minister Mahathir Mohamad says a $241.73-million offer of compensation by US investment bank Goldman Sachs is 'peanuts' compared to the scale of the alleged money laundering in the 1MDB scandal. Mohamad's statement comes after a court postponed a hearing in the criminal case against Goldman until September.
The Prime Minister of Malaysia believes Goldman owes his country much greater compensation for the financial harm and related damages dealt by the 1MDB scheme.
The scandal unravelled after Goldman helped Malaysian state-run fund 1Malaysia Development Berhad (1MDB) raise $6.5 bln in investment in 2012-13, and charged the company $600 mln – a price higher than typical Goldman fees. The scheme involved former Malaysian Prime Minister Najib Razak, who has since been accused of high-level government corruption.
"What Goldman Sachs has offered is not adequate", Mohamad said.
.@GoldmanSachs is offering ‘peanuts’ to compensate for #1MDB, Malaysian PM Mahathir Mohamad tells CNBC's @tanvirgill2. Earlier this year, the country's finance minister said that Malaysia is seeking $7.5 billion from the bank. https://t.co/oTNhxHVElx pic.twitter.com/ChyuJYoWC3— CNBC International (@CNBCi) June 24, 2019
On Monday, a court in Kuala Lumpur postponed a criminal case against Goldman until 30 September. The decision came after Goldman's defence attorneys said they needed to hear from their clients outside of the country, to respond to Malaysia's criminal charges against them.
Malaysian authorities suspect several employees in Goldman units in Hong Kong, London, and Singapore are potentially involved with the illicit offshoring of funds from Malaysia's state budget in connection with the 1MDB scheme.
Goldman Sachs' role in the 1MDB scandal - in 300 words https://t.co/48LtwEY7gD— BBC Business (@BBCBusiness) February 10, 2019
According to the US Department of Justice, roughly $4.5 bln were improperly moved out of Malaysia in 2009-2014, but Malaysia's case against Goldman focuses on a $6.5-billion bond issue, which involved Goldman bankers. The country is seeking $7.5 bln from Goldman – making the Goldman-proposed compensation of less than $250 mln look insufficient.
Goldman insists it was misled by its counterpart at 1MDB. The investment bank has already apologised to the people of Malaysia for the extensive misappropriation of funds but said 1MDB lied about its dealings when hiring Goldman to provide assistance.
Goldman says its lawyers in Hong Kong received a summons from a Malaysian court just last week, while the summons sent to the Singapore unit was incomplete and included only three of four charges.
The bank said it needs more time to be fully-prepared for hearings in Malaysia, and all paperwork must be in order.
"Under such circumstances, we ask for another date... so that we will have enough time to take instructions from our clients", Goldman's lawyer Hisyam Teh told the Malaysian court, which satisfied the plea.
Meanwhile, Najib, who supposedly organised and orchestrated the entire 1MDB affair, is facing 42 criminal indictments over the fund's losses and procedural violations. He insists he's not guilty – but observers say his chances of acquittal are bleak after losing re-election last year.
The Malaysian Anti-Corruption Commission (MACC) has filed forfeiture suits with the KL High Court against 41 individuals/entities linked to money received from DS Najib Razak's AmBank account pic.twitter.com/RkIB9PWcvd— TheMalaysianReserve (@TMReserve) June 21, 2019
Earlier this year, Malaysian Minister Lim Guan Eng urged Goldman to "have a heart" and offer fair and sufficient compensation to the Malaysian government.
Investigators have since established that the majority of recipients of the misappropriated funds through 1MDB were affiliates of Malaysia's former ruling party chaired by Najib – which means the funds could be returned to the Malaysian budget.
"As far as the law is concerned with unlawful activity, as long as the person who received money did not take steps to find out where it came from, they are subject to the forfeiture process", Latheefa Koya, director at Malaysian Anti-Corruption Commission (MACC), said... "You can’t give the defence of being shocked or surprised".
The MACC has so far been able to track only $65 mln of the billions lost in the 1MDB scheme. Therefore, Malaysia is expected to push for greater compensation from Goldman, with refunds possibly exceeding Goldman's own profit from dealing with 1MDB.