KUALA LUMPUR, Oct 12 — The government will respond to Goldman Sachs’ filing for arbitration against Malaysia in the 1Malaysia Development Bhd (1MDB) settlement dispute in accordance with the established legal frameworks, while safeguarding the interests of Malaysians.
“The 1MDB Taskforce Committee is quite surprised at the conduct of Goldman Sachs as parties are still in the stage of good faith discussions to resolve any dispute amicably,” 1MDB Taskforce chairman (asset recovery) Datuk Seri Johari Abdul Ghani said in a statement in response to the news of the suit.
“However, in light of recent events, Malaysia government will be preparing to respond to this matter and ensure that this process is done diligently and in accordance with the established legal frameworks, while ensuring that the interest of the Malaysian people is safeguarded.”
Bloomberg reported that Goldman Sachs Group Inc is suing Malaysia in a United Kingdom court amid festering disagreement over a settlement tied to its role in the 1MDB investment-fund scandal.
“We filed for arbitration against the Malaysia government for violating its obligations to appropriately credit assets against the guarantee provided by Goldman Sachs in our settlement agreement and to recover other assets,” the report quoted a spokesman for the New York-based bank as saying.
Johari said Goldman Sachs’ action of initiating arbitration proceedings also appear to be an attempt to detract and divert attention away from the bank’s obligation to adhere to the interim payment of US$250 million (US$1=RM4.72) requirement under the settlement agreement.
Settlement agreement and deadline extensions
To ensure that the public is fully informed on the current situation, Johari provided the following sequence of events that have taken place regarding the Goldman Sachs settlement agreement:
- The Goldman Sachs Settlement Agreement was signed on August 18, 2020, consisting of two parts — cash payment of US$2.5 billion paid 10 days from signing of the settlement agreement; and asset recovery guarantee of US$1.4 billion by Goldman Sachs within five years from the date of the settlement agreement.
- Under the asset recovery guarantee, if the Malaysian government does not recover the sum of US$500 million by August 18, 2022 (two years from the signing of the settlement agreement), Goldman Sachs would be required to pay US$250 million as interim payment to the government.
- On August 18, 2022, the accounting provided by the government to Goldman Sachs showed that it had not recovered US$500 million and hence was entitled to the interim payment of US$250 million. This was disputed by Goldman Sachs.
- The settlement agreement allowed parties to engage in amicable good faith discussions for the period of three months if a dispute relating to the settlement agreement arose.
- Separate extensions were granted by the Malaysian government to Goldman Sachs upon expiry of the initial August 18, 2022 deadline to try and amicably settle this dispute.
Johari said the four extensions that were given are as follows:
a. Goldman Sachs requested for extension of time of three months on September 8, 2022, and this extension expired on December 8, 2022 (first extension);
b. On December 8, 2022, a further extension was given and this extension expired on February 8, 2023 (second extension);
c. On February 8, 2023, another extension was given, and this expired on May 8, 2023 (third extension); and
d. The last extension was given on August 8, 2023, and this is set to expire on November 8, 2023 (fourth extension).
Johari said if a settlement is not reached between the parties by the November 8, 2023 deadline, the government can begin arbitration proceedings in respect of the interim payment of US$250 million.
“At this juncture, and as mentioned above, 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,” he added.
— Bernama
