Goldman should pay Malaysia US$7.5b for 1MDB fiasco, finance minister says

KUALA LUMPUR, Dec 21 — Putrajaya has finally put US$7.5 billion (RM31.25 billion) as the compensation amount owed by tainted US investment bank Goldman Sachs for its blunder over 1Malaysia Development Berhad (1MDB).

Finance Minister Lim Guan Eng told Financial Times (FT) in an article today that the government is looking for reparation beyond the sum of its losses in the “excessive” US$600 million fees paid to Goldman Sachs and three bonds arranged by the bank.

“We are not only looking at just the [bond] fees and issuance [volumes]. We are looking for a much larger sum.

“Their figure is US$1.8 billion. Ours is US$7.5 billion,” he told the international business paper.

Lim’s breakdown of the US$7.5 billion covered US$6.5 billion losses from the sum of two 1MDB bonds in 2012 and another in 2013 that “were not used for national development but was siphoned out.”

The remaining US$1 billion is to cover the US$600m in fees to Goldman and the three 10-year bonds that carried coupons ranging from 4.4 per cent to 5.99 per cent, which FT reported to be “higher than the market rate.”

FT reported Goldman Sachs telling its investors that it has set aside US$1.8 billion to cover the potential losses related to legal proceedings and past investments involving 1MDB.

Lim said the government is not engaged in negotiations with Goldman at the moment, but indicated that it is open to do so depending on discussions over criminal charges filed last Monday against the bank’s three subsidiaries — Goldman Sachs International (UK) which had arranged the sale of the three bonds, Goldman Sachs (Singapore) Pte and Goldman Sachs (Asia) LLC.

He said the Attorney-General’s Chambers will take charge of the negotiation talks if any, though the Cabinet will still have the final say on whether to accept any offer from Goldman.

In an interview with FT published last month, Datuk Seri Anwar Ibrahim said Goldmans alleged collusion with fugitive financier Low Taek Jho to defraud Malaysia via the state investment firm has inflicted severe damage to the country’s reputation.