Goldman helped the Malaysian government raise $US6.5 billion for the 1MDB fund, collecting some $600 million in fees from bond sales in 2012 and 2013, according to court filings. Prosecutors allege that part of that money was diverted to 1MDB officials and their associates.
Malaysian prosecutors brought charges against three units of the bank in 2018, then followed with additional accusations against Goldman’s 17 current and former executives last year. The bank has consistently denied wrongdoing, saying that former Malaysian officials lied about how proceeds from the bond sales would be used.
The settlement is a major milestone for prime minister Muhyiddin Yassin, a step toward ending Malaysia’s years-long effort to recover billions of dollars lost through the scandal.
In 2018, the affair led to the country’s first change of government since its independence, when Mahathir Mohamad took over as Prime Minister from Najib Razak, who now faces multiple charges related to 1MDB.
The Mahathir government demanded as much as $US7.5 billion from Goldman Sachs, while its negotiators had touted figures of around $US2 billion to $US3 billion in private discussions.
The state fund remains a sore political point even after another power shift this February, as Malaysia’s current government under Muhyiddin counts on the backing of United Malays National Organisation, the former ruling party once led by Najib.