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Govt to respond to Goldman Sachs’ move, says Johari

KUALA LUMPUR: 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 ensuring the interests of Malaysians are safeguarded.

“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. “However, in light of recent events, the government will be preparing to respond to this matter and ensure this process is done diligently and in accordance with the established legal frameworks while ensuring the interest of the Malaysian people is safeguarded,” said 1MDB Taskforce (asset recovery) chairman Datuk Seri Johari Abdul Ghani in a statement, Bernama reported.

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 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,” the report quoted a spokesman for the New York-based bank as saying.

Johari said Goldman Sachs’ action of initiating arbitration proceedings also appears to be an attempt to detract and divert attention away from the bank’s obligation to adhere to the interim payment of US$250mil requirement under the settlement agreement.

To ensure the public is fully informed on the current situation, he provided the following sequence of events that have taken place regarding the Goldman Sachs settlement agreement:

The Goldman Sachs Settlement Agreement was signed on Aug 18, 2020, consisting of two parts: a cash payment of US$2.5bil paid 10 days from signing of the settlement agreement and an asset recovery guarantee of US$1.4bil 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$500mil by Aug 18, 2022, (two years from the signing of the settlement agreement), Goldman Sachs would be required to pay US$250mil as an interim payment to the government.

On Aug 18, 2022, the accounting provided by the government to Goldman Sachs showed that it had not recovered US$500mil and hence was entitled to the interim payment of US$250mil. This was disputed by Goldman Sachs. The settlement agreement allowed parties to engage in amicable good-faith discussions for a period of three months if a dispute relating to the settlement agreement arose.

A separate extension was granted by the Malaysian government to Goldman Sachs on the expiration of the initial Aug 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 an extension of three months on Sept 8, 2022 and this extension expired on Dec 8, 2022 (first extension);

(b) On Dec 8, 2022, a further extension was given and this extension expired on Feb 8, 2023 (second extension);

(c) On Feb 8, 2023, another extension was given and this expired on May 8, 2023 (third extension); and

(d) The last extension was given on Aug 8, 2023 and this is set to expire on Nov 8, 2023 (fourth extension).

Johari said if a settlement was not reached between the parties by the Nov 8, 2023 deadline, the government could begin arbitration proceedings in respect of the interim payment of US$250mil.

“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.

Meanwhile, the Attorney General’s Chambers (AGC), in a separate statement, acknowledged having received a Request for Arbitration on Oct 11.

“The dispute arises from allegations by Goldman Sachs of breaches by the government stemming from the Settlement Agreement entered into between Goldman Sachs, the Government of Malaysia and 1MDB on Aug 18, 2020.

“The Government of Malaysia denies all allegations contained in the Request for Arbitration as it mischaracterizes the conduct of the Government of Malaysia.”

“The AG will prepare its response within the confines of the law and reiterate that the interest of the Malaysian people is paramount.”

Source : THE STAR

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