Money & Banking

Goldman’s 1MDB charges dropped by Malaysia after settlement

Bloomberg September 4 | Updated on September 04, 2020 Published on September 04, 2020

Goldman Sachs had to boost its legal reserves by $2.01 billion to account for the Malaysia settlement, shaving its second-quarter net income by 85 per cent and wiping out what had been a surprise jump in profit due to trading gains   -  REUTERS

The settlement doesn’t affect Malaysia’s claims against other people, including mastermind Low Taek Jho

Malaysia has dropped criminal charges against Goldman Sachs Group Inc units, a key step in the $3.9-billion settlement agreement that allows the bank to move on from the 1MDB scandal.

The US bank was discharged amounting to acquittal, according to court proceedings in Kuala Lumpur on Friday.

The move marks progress in Goldman Sachs’s efforts to resolve its worst scandal since the financial crisis as it grapples with separate discussions with the US Department of Justice for a settlement over 1MDB.

As part of the deal with Malaysia, the bank had paid $2.5 billion in cash to Malaysia last week and pledged to guarantee the return of $1.4 billion from 1MDB assets seized around the world over the coming years. In exchange, Malaysia would drop criminal charges against the bank’s units over accusations that they misled investors in raising billions of dollars for 1MDB while allegedly knowing the funds would be misappropriated.

Legal reserves

Goldman Sachs had to boost its legal reserves by $2.01 billion to account for the Malaysia settlement, shaving its second-quarter net income by 85 per cent and wiping out what had been a surprise jump in profit due to trading gains.

The bank’s settlement doesn’t affect Malaysia’s claims against other people including Low Taek Jho, the scandal’s alleged mastermind known as Jho Low, and other parties. Prosecutors seek to bring former Goldman Sach’s banker Roger Ng, who’s in the US to face 1MDB-related charges, back to Malaysia in November to face similar accusations. Ng’s next case mention date is set for September 10.

The scandal surrounding 1MDB had led to the ouster of Malaysia’s former premier Najib Razak in 2018 and triggered corruption investigations in at least 10 countries, including Singapore and Switzerland. Najib was found guilty of corruption last month and sentenced to 12 years in prison in the first trial over the scandal to reach a conclusion, while Jho Low remains at large.

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Published on September 04, 2020
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