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Goldman Sachs said it has sued the government of Malaysia over disputed payments that the Wall Street bank argued were not being recognised as part of its 2020 settlement over the 1MDB money-laundering scandal.
The complaint marks the latest chapter in Goldman’s role in the multibillion-dollar embezzlement scheme involving Malaysian state investment fund 1MDB, one of the largest financial crimes of all time and the most painful experience in Goldman’s recent history.
“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,” Goldman said in a statement.
Goldman filed the complaint in the London Court of International Arbitration, according to a person familiar with the matter.
The dispute centres on a settlement Goldman agreed in 2020 to pay the government of Malaysia $2.5bn over its role in the 1MDB scandal.
Goldman had also agreed to send at least $500mn in assets related to 1MDB by August 2022 or face another $250mn penalty. Goldman and Malaysia are at odds over whether the bank has provided the assets.
The suit by the US bank will extend a fraught and long-running legal battle with Malaysia that was expected to conclude with the 2020 settlement.
Malaysia’s prime minister Anwar Ibrahim this year talked publicly about Goldman needing to honour its settlement. In August he told CNBC that his government had not ruled out filing its own lawsuit against the bank.
A representative for the Malaysian government declined to comment immediately. The complaint was first reported by Bloomberg.
The revelations of the 1MDB fraud sent reverberations through Singapore and Wall Street and led to the jailing of former Malaysian prime minister Najib Razak for abuse of power, money laundering and criminal breach of trust.
US authorities have alleged that $4.5bn from the fund was misused on purchases including luxury real estate, expensive jewellery and to finance the Oscar-nominated film The Wolf of Wall Street.
Malaysian financier Jho Low was alleged to be the mastermind of the scheme, but US officials have said Goldman played a pivotal role, arguing that the bank should have detected warning signs and could have prevented at least some part of the theft from the fund. Low is still at large and denies wrongdoing.
In 2012 and 2013, Goldman arranged three bond sales for 1MDB, raising $6.5bn, much of which was ultimately stolen, and received $600mn in fees — a sum Malaysia has said was excessive. Former Goldman banker Roger Ng was sentenced to 10 years in prison in March over his role in the case.
Ex-Goldman partner Tim Leissner has also pleaded guilty to charges of violating foreign bribery laws in connection with 1MDB and conspiring to launder money. His sentencing is set for March 2024.
