GOLDMAN SACHS Group sued Malaysia in a UK court on Wednesday, as tensions escalate over a settlement agreement on the bank’s role in the multi-billion-dollar 1MDB corruption scandal.
“Today, we filed for arbitration against the Government of Malaysia for violating its obligations to appropriately credit assets against the guarantee provided by Goldman Sachs in our settlement agreement and to recover other assets,” a spokesperson for the bank told Reuters.
The arbitration has been filed with the London Court of International Arbitration, a source told Reuters. The lawsuit was earlier reported by Bloomberg News.
Meanwhile, a Malaysian government task force said on Thursday it viewed Goldman Sachs’ filing of arbitration proceedings as premature.
Goldman Sachs in 2020 had agreed to pay $3.9 billion to settle Malaysia’s criminal probe over its role in the multi-billion dollar 1MDB corruption scandal.
But the parties are now in disagreement over the deal, which includes a stipulation for Goldman to make an interim payment if Malaysia did not recover at least $500 million from the firm by August 2022.
Malayia’s 1MDB task force said Goldman Sachs had requested several extensions to a deadline for discussions to settle the dispute. The latest deadline is Nov. 8.
“At this juncture… parties are still considered to be in the amicable good faith discussions stage and therefore as an aggrieved party, the 1MDB Taskforce views Goldman Sachs’ initiation of arbitration proceedings as premature and without due consideration of necessary prerequisites,” 1MDB task force chairman Johari Abdul Ghani said in a statement.
Mr. Johari accused Goldman of trying to distract from the interim payment, and said the Malaysian government would respond to the matter accordingly.
Goldman Sachs lodged its suit less than two months after Malaysian Prime Minister Anwar Ibrahim threatened to take the company to court.
Malaysian and US authorities estimate some $4.5 billion were stolen from 1MDB between 2009 and 2014, in a globe-spanning scheme that implicated high-level government and banking officials in Malaysia and elsewhere.
Goldman had helped 1MDB raise $6.5 billion in two bond offerings, earning itself $600 million in fees, according to the US Justice Department.
The United States has been returning funds it has recovered from seized assets that were allegedly bought with stolen 1MDB money. — Reuters