JANUARY 20 — As Malaysians we should welcome the apology from Goldman Sachs over the 1MDB debacle. We should accept it as a good gesture from Goldman Sachs to initiate communication with us and we should now wait and see what they will do next. It is certainly not a closed matter.

About six years ago in 2012 /13 Goldman Sachs was engaged by an Incorporated entity to raise US$6.5 for the 1MDB fund and for that service Goldman was paid US$593 million or nine per cent of the amount raised. Almost four years later the Department of Justice of the United States of America (USDOJ) in a statement in July 2016 stated that the US Government was embarking on "its largest single action " under their Kleptocracy Initiative. It was alleged by the US DOJ that almost 40 per cent of the funds raised was transferred out of 1MDB accounts and went into the accounts of a Swiss Bank account controlled by a shell company incorporated in the British Virgin Islands. After that the money was being constantly transferred as if such movement would render that money respectable.

Now, these gyrating funds are the subject of inquiry, investigation and indictment in several countries, including Malaysia, Singapore, Australia, Switzerland and possibly at least two other countries.

It is helpful that Tim Leissner, the then Goldman Sachs Chairman for Southeast Asia has pleaded guilty in the US to conspiracy relating to money laundering, bribery and corruption in violation of the US Foreign Corrupt Practices Act. Under US laws all monetary and other assets acquired as a result of the violation of this FCPA would be forfeited. Other charges have been brought against Leissner’s co- conspirators and they would also be charged, tried, and if found guilty, convicted.

Goldman Sachs cannot now claim ignorance of the acts of criminal impropriety of its employees. Leissner could not have committed these offences as a private individual but with the status and legal affiliation he had with Goldman Sachs.

We should realistically expect that arising from their qualified apology Goldman Sachs would seek to negotiate with the relevant Malaysian authority to resolve this issue amicably. Time is on their side as the various indictments, court processes and convictions will take some time. It is essential that Goldman Sachs shows some earnestness in wanting to come to an early agreement so that this matter does not drag on.

With hindsight, it is now realised that Goldman Sachs, in arranging the US US$6.5 billion bond facility actually gave the Malaysian people a poisoned chalice. The embezzlement of the 1MDB funds has created for the Malaysian people an unprecedented debt burden.

Given this background, in any agreement reached between Malaysia and Goldman Sachs at least three questions must be resolved. Goldman Sachs must agree to their culpability and a mutually agreed quantum of substantial compensation to the Malaysian Government. A ballpark figure of US US$10 billion is not far-fetched.

Secondly Goldman Sachs must agree to assist the relevant Malaysian authority to provide the necessary assistance to prosecute all those who acted in violation of the Malaysian Penal Code in respect of 1MDB.

In the third part of this trilogy a banking and financial transaction quarantine should be imposed so that Goldman Sachs and its subsidiaries are banned from engaging in or entering any new banking, fiduciary or business ventures for ten years in Malaysia.

Adherence to these conditions would be a clear indication that this government seriously subscribes to the Rule of Law.

Martin Wolf, the well regarded Financial Times columnist would feel vindicated by these steps as he had some eleven years ago (on page 11 of the FT on January 16, 2008) written:

"No industry has a comparable talent for privatising gains and socialising losses. Participants in no other industry get as self-righteously angry when public officials -particularly, central bankers fail to come at once to their rescue when they get into (well deserved) trouble.”

The world must know our Malaysia is not some tin-pot entity.

*Dato’ M Santhananaban is a retired Malaysian Foreign Service Officer.

**This is the personal opinion of the writer and does not necessarily represent the views of Malay Mail.