KUALA LUMPUR: The government will respond to Goldman Sachs’ filing for arbitration against Malaysia in the 1Malaysia Development Bhd (1MDB) settlement dispute in accordance with the established legal frameworks while ensuring that the interest of the Malaysian people is safeguarded.
"The 1MDB Taskforce Committee is quite surprised at the conduct of Goldman Sachs as parties are still in good faith discussions to resolve any dispute amicably.
"However, in light of recent events, the government of Malaysia will be preparing to respond to this matter and ensuring that this process is done diligently and in accordance with the established legal frameworks while ensuring that the interest of the Malaysian people is safeguarded,” 1MDB Taskforce chairman (asset recovery) Datuk Seri Johari Abdul Ghani said in a statement in response to the news of the suit.
Bloomberg reported that Goldman Sachs Group Inc is suing Malaysia in a United Kingdom court amid festering disagreement over a settlement tied to its role in the 1MDB investment-fund scandal.
"We filed for arbitration against the government of Malaysia for violating its obligations to appropriately credit assets against the guarantee provided by Goldman Sachs in our settlement agreement and to recover other assets,” the report quoted a spokesman for the New York-based bank as saying.
Johari said Goldman Sachs’ action of initiating arbitration proceedings also appears to be an attempt to detract and divert attention away from the bank’s obligation to adhere to the interim payment of US$250mil (RM1.18bil) requirement under the settlement agreement.
Settlement agreement and deadline extensions
To ensure that the public is fully informed on the current situation, he provided the following sequence of events that have taken place regarding the Goldman Sachs settlement agreement:
The Goldman Sachs Settlement Agreement was signed on Aug 18, 2020, consisting of two parts -- cash payment of US$2.5bil (RM11.8bil) paid 10 days from the signing of the settlement agreement and asset recovery guarantee of US$1.4bil (RM6.6bil) by Goldman Sachs within five years from the date of the settlement agreement.
Under the asset recovery guarantee, if the Malaysian government did not recover the sum of US$500mil (RM2.6bil) by Aug 18, 2022 (two years from the signing of the settlement agreement), Goldman Sachs would be required to pay US$250mil (RM1.18bil) as interim payment to the government.
On Aug 18, 2022, the accounting provided by the government to Goldman Sachs showed that it had not recovered US$500mil (RM2.6bil) and hence was entitled to the interim payment of US$250mil (RM1.18bil). Goldman Sachs disputed this.
The settlement agreement allowed parties to engage in amicable good faith discussions for three months if a dispute relating to the settlement agreement arose.
The Malaysian government granted a separate extension to Goldman Sachs on the expiry of the initial Aug 18, 2022 deadline to try and amicably settle this dispute.
Johari said the four extensions that were given are as follows:
(a) Goldman Sachs requested an extension of three months on Sept 8, 2022, whichexpired on Dec 8, 2022 (First extension).
(b) On Dec 8, 2022, a further extension was given, which expired on Feb 8, 2023 (Second extension).
(c) On Feb 8, 2023, another extension was given, which expired on May 8, 2023 (Third extension).
(d) The last extension was given on Aug 8, 2023, and this is set to expire on Nov 8, 2023 (Fourth extension).
Johari said if a settlement is not reached between the parties by the Nov 8, 2023 deadline, the government can begin arbitration proceedings regarding the interim payment of US$250mil (RM1.18bil).
"At this juncture, and as mentioned above, parties are still considered to be in the amicable good faith discussions stage and therefore as an aggrieved party, the 1MDB Taskforce views Goldman Sachs’ initiation of arbitration proceedings as premature and without due consideration of necessary prerequisites,” he added.- Bernama
