KUALA LUMPUR, June 21 — Prime Minister Tun Dr Mahathir Mohamad revealed today that US investment bank Goldman Sachs had offered Malaysia RM1 billion to settle the 1MDB case out of court.

The New York-based bank is accused of misleading investors when it helped 1MDB raise US$6.5 billion (RM27 billion) through bond deals in 2012 and 2013, while allegedly knowing that the funds would be misappropriated.

The Malaysian courts set June 24 for pretrial hearing and had issued summonses to Goldman Sachs Hong Kong and London branches. Only the Singapore unit of Goldman Sachs has appeared at a pre-trial hearing in a Kuala Lumpur court as a respondent in March.

“The Attorney General (AG) is in charge when it comes to any matters regarding government cases, procedures and everything must be done properly when it comes to these matters,” Dr Mahathir said when asked if there was an offer from the back and if he directed the AG to handle it.

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The prime minister was asked this during a live interview from Bangkok, Thailand where the 5th Bloomberg Asean Business Summit is taking place.

“They offered RM1 billion in compensation but the total amount we’ve lost is US$6.5 billion of which Goldman Sachs took 10 per cent commission in addition to hefty interest rate of 6 per cent.

“That’s not usual for governments who normally get charged less than three per cent. This 10 per cent extra that goes to Goldman Sachs means that we get 90 per cent of the money raised but we pay interest of 100 per cent.

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“That’s what it means and Goldman Sachs made a huge killing from it,” he added.

The 1MDB scandal played a major role in the electoral defeat that ended former prime minister Datuk Seri Najib Razak’s near decade in power, and a new government led by Dr Mahathir promptly re-opened corruption investigations.

Najib, who has consistently denied wrongdoing, is facing multiple criminal charges, mostly linked to 1MDB, and has been barred from leaving the country.

The US Department of Justice (DoJ) has estimated that a total of US$4.5 billion was misappropriated by high-level 1MDB fund officials and their associates between 2009 and 2014, including some of the funds that Goldman Sachs helped raise.

Malaysia has said it was seeking up to US$7.5 billion in reparations from Goldman Sachs, including US$600 million in fees paid to the bank for the bond issues.

Dr Mahathir was pressed if he would take legal action against the bank, how long he was willing to wait and how much he would like to get back from Goldman Sachs.

“We wanted to settle this out of court if possible but they were not willing to offer a reasonable sum of money. We’d like to get our 10 per cent back, at least,” said Dr Mahathir.

“The AG is trying to expedite things as fast as possible. We can’t hurry the courts. If we told the AG to expedite this matter that’s us interfering with the law and we can’t do that.”

“If the money is invested in something then they can go after the company and ask for the money back, but the money is stolen, hidden somewhere and they are not telling us.

“A number of people were known to have handled the money. Unless of course we can squeeze them, not physically, we will now know where the money is,” said Dr Mahathir.

So far Malaysia has cooperated closely with Switzerland and Singapore in tackling the 1MDB scandal but when asked why he didn’t pursue conspirators from Saudi Arabia and Abu Dhabi with the same fervor, Dr Mahathir said they have a special way to deal with Arabs.

“These are our Arab friends and we deal with them in a purely Arab fashion which is quite different,” said Dr Mahathir.

“I cannot tell you what that is but we have to understand how people work. Some people are very frank and direct in handling things but sometimes you have to be more diplomatic,” he explained.