Goldman Sachs has brought a suit against Malaysia in the London Court of International Arbitration. It relates to an earlier settlement with Malaysia regarding the bank’s role in one of history’s largest embezzlement schemes.
This is just the latest in the saga over Malaysia’s 1MDB state fund, through which then-Prime Minister Razak and his associates funnelled $4.5B to buy luxury goods and (funnily enough) even finance The Wolf of Wall Street film.
The full extent of the scam started to emerge in 2015:
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- Many countries (like Switzerland and the US) opened probes
- Officials from Malaysia, the UAE and Saudi Arabia were implicated
- Authorities froze hundreds of international bank accounts
- Malaysia accused China of harbouring the scam’s key architect, and
- At least two Goldman Sachs executives have been convicted for their role in the scheme (which earned the bank $600M in fees).
In the fallout, Prime Minister Razak copped a 12-year prison sentence, while Goldman agreed to pay billions to Malaysia to resolve criminal charges. But:
- Malaysia says the bank has failed to recover lost assets as promised, meaning Goldman owes $250M in interim payments, while
- Goldman says Malaysia is failing to take certain assets into account.
Malaysia’s prime minister recently threatened to sue the bank, and met Goldman executives in New York. But with this week’s news, it now seems Goldman has made the first move.
Intrigue’s take: This is the story that just keeps on giving. Malaysia actually classified the terms of its initial 2020 settlement with Goldman under the country’s Official Secrets Act. So there’s speculation Malaysia is now considering declassifying that deal in order to defend itself in court.
And this could reveal more intriguing details, like how the bank managed to secure the controversial settlement with Malaysia in the first place.
Also worth noting:
- The 1MDB scandal became public after a cache of 227,000 leaked emails emerged in the media.
- The alleged scam mastermind and international fugitive Jho Low was reportedly photographed in Macau last year.