PETALING JAYA: 1MDB taskforce chairman Johari Ghani has labelled Goldman Sachs’ action in pursuing arbitration against the government over a 1MDB settlement entered three years ago as “premature” and “without due consideration of the necessary prerequisites”.
“However, in light of recent events, the Government of Malaysia will be preparing to respond to this matter and ensuring 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,” he said in a statement.
Yesterday, Bloomberg reported that the investment bank had taken the “unusual step” of commencing arbitration proceedings in a UK court “amid festering disagreement over a settlement tied to its role in the 1MDB scandal”.
Johari, however, denounced Goldman Sachs’ move as an “attempt to detract and divert attention away” from its obligation to make an interim payment to the government of US$250 million under the settlement agreement.
He said Goldman Sachs and the government were still at the stage of “amicable good faith discussions” over the dispute.
“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 said.
Johari said the agreement, signed on Aug 18, 2020, requires Goldman Sachs to make payment in two parts – a cash payment of US$2.5 billion paid within 10 days of the signing of the agreement, and an asset recovery guarantee of US$1.4 billion within five years.
He said Goldman Sachs was obliged to make the interim payment of US$250 million if it fails to recover assets worth US$500 million within two years of the signing of the agreement.
“On Aug 18, the accounting provided by the government of Malaysia to Goldman Sachs showed that it had not recovered US$500 million and hence, the government of Malaysia is entitled to the interim payment of US$250 million. This was disputed by Goldman Sachs,” said Johari.
He said the agreement provided for both parties to engage in “amicable good faith discussions” for a period of three months if a dispute relating to the settlement agreement arose.
“Four separate extensions were granted to Goldman Sachs by the government of Malaysia upon expiry of the initial Aug 18, 2022 deadline to try and amicably settle this dispute.
“The current deadline for the latest extension expires on Nov 8, 2023, and if a settlement is not reached between the parties by this deadline, the government of Malaysia can commence arbitration proceedings in respect of the interim payment of US$250 million,” he said
Nevertheless, the government will respond to the matter of these proceedings accordingly, he said.
According to Bloomberg, a spokesman for the investment bank accused Malaysia of “violating its obligations to appropriately credit assets against the guarantee provided by Goldman Sachs” and for failing in its obligation to recover “other assets”.
It also claimed the bank’s executives “had grown increasingly frustrated” with the government’s demands for the agreement to be reworked so that “more onerous penalties” are imposed.
In August, Prime Minister Anwar Ibrahim was reported as telling CNBC in an interview the government was considering its own suit against Goldman Sachs over the matter.
In an earlier interview with Bloomberg in January, Anwar had accused Goldman Sachs of failing to honour the terms of the settlement, saying the Wall Street firm was using its financial strength to dictate terms to the government.
Source : FMT