Malaysia’s finance minister says Goldman Sachs should pay $7.5bn in reparations over its business with the scandal-ridden 1MDB state investment fund, piling on to the criminal charges Kuala Lumpur filed against the Wall Street bank earlier this week.
“We are not only looking at just the [bond] fees and issuance [volumes]. We are looking for a much larger sum,” Lim Guan Eng told the Financial Times.
The sum of $7.5bn is the highest reparations target so far demanded by Malaysia, and follows comments by Anwar Ibrahim, the country’s probable next prime minister, calling for restitution in excess of the $600m the bank gained in fees from 1MDB
Mr Lim argued Goldman should return $6.5bn — the sum of three 1MDB bonds arranged by Goldman in 2012 and 2013, the proceeds of which “were not used for national development but was siphoned out”; plus $1bn to cover $600m in fees paid to Goldman — which Mr Lim said were excessive — and bond coupons that were “higher than the market rate”. The three 10-year bonds carried coupons ranging from 4.4 per cent to 5.99 per cent.
The finance ministry’s demands add to heightened pressure on the bank, as authorities in the US, Singapore and Malaysia all escalated action against Goldman in the last two months.
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In response Goldman said: “The 1MDB bond offerings were meant to raise money to benefit Malaysia; instead, a huge portion of those funds were stolen for the benefit of members of the Malaysian government and their associates.”
Malaysia is not currently negotiating with Goldman, but charges filed on Monday could bring the bank to the table, the finance minister said. “We will just let the due process take its course.”
The attorney-general’s office would lead potential discussions, but “they would have to refer back to me and the cabinet whether what [Goldman] offer[s] is acceptable or not”, added Mr Lim.
Kuala Lumpur on Monday filed charges against subsidiaries of Goldman and former bankers Mr Leissner and Mr Ng, who are accused of misappropriating $2.7bn from 1MDB bond proceeds to bribe Malaysian officials so the bank would win business advising the fund.
Attorney-general Tommy Thomas said prosecutors would seek fines “well in excess” of the $600m underwriting fees and $2.7bn they alleged were embezzled from the funds raised.
Kuala Lumpur’s accusations largely mirror charges filed by the DoJ last month, with the difference that Malaysia has targeted Goldman entities in addition to former staff.
The US alleges a total of $4.5bn was misappropriated from 1MDB and used to buy expensive works of art, luxury real estate and custom-made jewellery, including a 22-carat pink diamond pendant.
Publication: Financial Times| Malaysia Finance Minister Wants $7.5bn From Goldman