Malaysia in talks with Goldman to drop 1MDB charges: Prosecutor

But Malaysia’s top prosecutor tells Nikkei that criminal charges against the bank will stay in place as talks proceed.

1MDB stock image
Malaysia filed criminal charges against Goldman Sachs in 2018 over three bond sales that raised $6.5bn for the scandal-ridden 1Malaysia Development Berhad [File: Olivia Harris/Reuters]

Investment banking giant Goldman Sachs has been in talks with Malaysian authorities to drop criminal charges against three of its subsidiaries over the 1Malaysia Development Berhad (1MDB) scandal, the country’s top prosecutor told the Nikkei Asian Review.

Investigators from Malaysia and United States say about $4.5bn was misappropriated from the now-defunct state investment fund.

“Both the criminal charges and settlement negotiations are happening in parallel. They are not mutually exclusive,” Nikkei quoted Malaysian Attorney General Tommy Thomas as saying in a report on Thursday.

Thomas, who is leading Malaysia’s negotiating team, said two rounds of talks have taken place but the two parties were unable to agree on the amount of compensation.

“We have had some preliminary meetings, but the gulf is still very wide,” he was quoted as saying.

Last year, Malaysia becane the first country in the world to file criminal charges against Goldman, which it pinned to the bank’s role as underwriter and arranger of three bond sales that raised $6.5bn for 1MDB.

Malaysian prosecutors in August filed criminal charges against 17 current and former directors at Goldman’s units.

Thomas said settlement negotiations with Goldman could continue even after the criminal trial begins, although Malaysia has a strong case and is confident of winning it.

“A lot of cases are even settled even after the trial begins,” he told Nikkei. “So the doors for discussion are still open while the prosecution readies the criminal case.”

Al Jazeera could not immediately reach Thomas or other officials in his office for comment.

A Goldman spokesperson declined to comment when asked by the Reuters news agency. The bank said on Tuesday it was in discussions with governmental and regulatory authorities on the possibility of a resolution of investigations relating to 1MDB.

The bank has consistently denied any wrongdoing in the 1MDB issue, and said certain members of the former Malaysian government and 1MDB lied about the use of the proceeds of the bond sales.

Malaysia’s finance minister said earlier in October that it was not in talks with Goldman on the recovery of the 1MDB funds, according to local news outlets.

“There are no discussions with Goldman Sachs but we will continue with the legal process conducted by the attorney general,” Lim Guan Eng was quoted as saying by news portal Malaysiakini.

Meanwhile, former prime minister Najib Razak is facing dozens of graft and money-laundering charges over allegations that he received about $1bn in 1MDB funds. He has pleaded not guilty and the trial is continuing.

Thomas said the government estimated that fugitive financier Low Taek Jho, also known as Jho Low, whom investigators have named as a key figure in the scandal, stole more than $10bn from 1MDB but added that it would be impossible to recover the full amount.

Low has also denied wrongdoing and a spokesman for him said in July that “illegitimate proceedings” had been brought by the government of Prime Minister Mahathir Mohamad and that their outcome was “pre-ordained and politically motivated”.

Mahathir succeeded Najib in a historic election victory last year, unseating Najib’s ruling National Front coalition for the first time since Malaysia gained independence in 1957. The 1MDB issue galvanised public opinion by raising awareness of corruption.

Source: News Agencies