KUALA LUMPUR, July 9 — While Malaysia's economic recovery has taken the front seat amid the Covid-19 pandemic, the country is still pursuing compensation from investment bank Goldman Sachs in the range of US$2 billion to US$7.5 billion as settlement over the latter's role in the 1Malaysia Development Berhad (1MDB) scandal, Finance Minister Tengku Datuk Seri Zafrul Aziz has said.

In an interview with business publication Financial Times (FT), Tengku Zafrul also pointed out that Malaysia's economy would not collapse in the worst case scenario of not being able to recover 1MDB funds.

“Obviously the 1MDB case is important but not as crucial as our economic recovery,” he was quoted saying by FT.

“The worst case is we don’t get the recovery [of funds], which I hope will never happen. Will the economy collapse? No. Will investors stop coming to Malaysia? No. Will we not be able to pay our deficit? No.” he also said.

Last month, Tengku Zafrul said the government's budget deficit for this year is expected to grow to between 5.8 per cent and 6 per cent following unexpected spending this year in the form of economic stimulus packages to deal with the Covid-19 pandemic's economic effects, up from the last year's projection of a 3.2 per cent deficit for this year.

According to FT, Malaysia intends to use domestic borrowing to bring down the budget deficit back to below four per cent in the next three to four years, also noting that Tengku Zafrul will this month ask for the Parliament's nod to temporarily remove a legal limit of 55 per cent on the government's debt to GDP ratio before bring back the limit in five years' time.

FT reported Tengku Zafrul as saying that the Malaysian government's engagement with Goldman Sachs is continuing and will "stop when we get the right number" for a 1MDB settlement, which he said would be within the US$2 billion to US$7.5 billion range.

FT also reported him as saying that Malaysia was also in talks with banks that had dealt with 1MDB such as Deutsche Bank and UBS, 1MDB's previous auditors Deloitte and KPMG and law firms, quoting him as saying that there is a need to "apportion the blame".

On Tuesday, Tengku Zafrul, in an interview with Bloomberg, had also repeatedly stressed that Malaysia would want any settlement from Goldman Sachs over 1MDB to be a “fair” amount to the Malaysian government and Malaysians.

He had also reportedly expressed optimism that Malaysia’s efforts to recover funds lost in the 1MDB scandal would proceed smoothly.

In June, news agency Reuters reported Tengku Zafrul as saying that the Malaysian government would not be willing to accept compensation even in the range of US$3 billion (RM12.8 billion) from Goldman Sachs to settle the 1MDB case, adding that the government would pursue its court case against Goldman Sachs as long as the amount offered is not acceptable.

Last November, then prime minister Tun Dr Mahathir Mohamad said Malaysia had rejected Goldman Sachs’ offer of less than US$2 billion as settlement, noting that the country was seeking US$7.5 billion but may be willing to accept a lower sum if Goldman Sachs responds in a “reasonable” manner.

The Malaysian government had previously in December 2018 filed charges against Goldman Sachs’ three subsidiaries Goldman Sachs International Ltd, Goldman Sachs (Asia) LLC and Goldman Sachs (Singapore) over alleged involvement in a scheme to defraud the Malaysian government and investors in bond sales worth US$6.5 billion with false and misleading statements given during the fund-raising exercise for 1MDB, with the scheme alleged to have been done in conspiracy with other individuals such as fugitive businessman Low Taek Jho.

The trial involving the Goldman Sachs entities is expected to begin on November 9, with High Court judge Mohamed Zaini Mazlan to hear the case.

Charges were also brought in August 2019 by the Malaysian government against 17 of the current and former directors of the three Goldman Sachs entities.