SINGAPORE and LONDON – Malaysian Prime Minister Anwar Ibrahim is upping the ante on efforts to renegotiate a controversial settlement with Goldman Sachs for its role in the multi-billion-dollar 1Malaysia Development Berhad (1MDB) financial scandal and extradite one of Goldman’s convicted former bankers.
“We have our position; we want some more money back,” Anwar said candidly at a regional forum in Singapore this month, asserting that Malaysia is not “some banana republic where one can plunder and leave.” The premier has since reiterated his vow to take a “tougher” stance, including potential new legal action over settlement disagreements, is not a bluff.
While many observers see merit in the Malaysian leader’s claim of being short-changed by Goldman, winning concessions from the Wall Street giant would also be a needed political win for Anwar, who has lost political ground to the ethnic Malay nationalist opposition bloc, Perikatan Nasional (PN), which approved the 2020 settlement when it led government.
According to Bloomberg, Anwar recently claimed that Goldman executives have made fresh overtures and struck a noticeably more conciliatory tone on the matter during his recent visit to New York last week for the United Nations General Assembly. But it is altogether unclear whether a quick resolution of the dispute is in the cards.
Malaysia’s premier has not shied from publicly criticizing the settlement reached between Goldman Sachs and the previous Muhyiddin Yassin administration. The deal was announced as a US$3.9 billion settlement, but in reality, the US bank had only agreed to pay a $2.5 billion penalty while guaranteeing the return of $1.4 billion of 1MDB state fund assets.
At the time, politicians raised bipartisan objections to the deal, under which Malaysia agreed to drop criminal charges against Goldman and 17 of its executives. The settlement, reached by Muhyiddin’s government after less than five months in office, was widely criticized for accepting considerably less than the $7.5 billion demanded by the previous Mahathir Mohamad administration.
The deal’s critics have called on the Anwar administration to publish the terms of the settlement, thus far withheld from public scrutiny due to an alleged confidentiality provision with the US bank. Goldman helped raise $6.5 billion from three bond offerings for 1MDB in 2012 and 2013 that would later be misappropriated, earning itself an exorbitant $600 million in profits in the process.
“There will be political gain in showing up the bad deal that Muhyiddin’s government did with Goldman Sachs. But the fact is that the deal was rather bad given that Goldman Sachs was on the ropes at the point in time,” said P Gunasegaram, a columnist, independent analyst and author of the book “1MDB: The Scandal that Brought Down a Government.”
“While billed as a $3.9 billion settlement, the cash portion was only $2.5 billion, the remaining $1.4 billion being a guarantee if recoveries did not come up to the requisite sum. With ongoing efforts to recover the monies – proceeds from $6.5 billion in bonds – it was pretty much certain the recovery would exceed the guarantee,” he told Asia Times.
Anwar said in a recent Bloomberg interview that a new settlement is “possible because we are not unreasonable, we ask what is reasonable, and I even refused to state the quantum because then we should allow for some flexibility to discuss.” He added: “I don’t think it’s fair to suggest that the entire deal has got to be relooked into, but there are specific areas where there is a flaw.”
The premier elaborated that “the flaw is firstly the quantum and the interpretation of some of the clauses.” Anwar added that Goldman is “taking us for granted, they think that we’ll not proceed” with a fresh lawsuit. “There’s nothing for us to lose except for the legal fees, which a government can manage. But it’s also the integrity of Goldman Sachs that’s in question,” he said.
Goldman has not publicly responded to the Anwar administration’s stance on the deal, though analyst Gunasegaram believes it “would always prefer to make a settlement than to let it continue and see a whole host of embarrassing incidents to be dragged through the courtroom. The surprise the last time was that Malaysia settled for so little.”
Clare Rewcastle-Brown, editor of Sarawak Report, the whistle-blower website widely recognized for its intrepid reporting of the 1MDB scandal, told Asia Times that Goldman Sachs is likely “exploring whether there are other ‘low-key’ arrangements that can be arrived at to avoid any further scrutiny over how they have handled matters in Malaysia.”
Rewcastle-Brown pointed out that Goldman had paid more in its $2.9 billion settlement with the US Department of Justice (DoJ) in 2020 “than to the people they had ripped off in Malaysia.” She added that “Anwar has every right to review this deal and insist a better deal for Malaysia, and in the meantime, the strong smell that surrounds this deal ought to be investigated.”
Malaysia’s efforts to secure custody of former Goldman Sachs banker Roger Ng Chong Hwa are bound to play into the timing of any potential resolution. US government prosecutors have acknowledged that Ng, a Malaysian citizen who was extradited to the US in May 2019 under a special government-to-government deal, could play a key role in strengthening Malaysia’s case.
The 51-year-old was convicted in April 2022 for his role in defrauding 1MDB and just under a year later was sentenced to 10 years in prison by a US District Court. Ng, who once headed Goldman’s business in Malaysia, is believed to have knowledge of previously undisclosed 1MDB dealings between fugitive financier Low Taek Jho, or Jho Low, and top Goldman executives.
“The priority now is to get him (Ng) back to Malaysia and how much he can assist in the Goldman matter would be a consideration over how we in turn handle his legal troubles,” said a Malaysian government official closely involved in a task force set up by Anwar to lead the 1MDB asset recovery campaign cited by Channel NewsAsia in late August.
US prosecutors have pushed for Ng to serve out his jail time before he is handed over to Malaysia. Ng is currently out on bail in the US after courts deferred the start of his decade-long prison sentence, originally set to begin on May 4 but now pushed to October 6, purportedly to allow talks between the US and Malaysia on his repatriation to assist in the latter’s 1MDB probe.
Malaysian officials have confirmed that Ng has, via informal representations made through his lawyers, indicated that he would be ready to cooperate with Putrajaya on matters relating to the Goldman case. It is unclear if the former Goldman executive has or aims to reach a legal compromise with the Malaysian government.
Asia Times spoke to a source close to Amsterdam & Partners LLP, the law firm founded by prominent Canadian lawyer Robert Amsterdam that has been engaged by Malaysia to advocate for Ng’s return to Malaysia as per his 2019 extradition agreement, which purportedly obliges US prosecutors to seek court approval to repatriate him to the Southeast Asian nation before he serves his US prison term.
“The Malaysians are pretty unhappy with where the Americans are at right now” concerning Ng’s repatriation, said the source, who requested anonymity. US prosecutors have said they are working to ensure that Ng’s “return to Malaysia will not unduly delay the service of his US sentence.” The ex-banker’s fate is now the subject of ongoing bilateral negotiations between Malaysia and the US.
“Judging from recent similar diplomatic tussles between the US and other countries over wanted persons, such as the Meng Wanzhou case in Canada and the prisoner swap between US and Iran, it would appear that much would depend on the diplomatic negotiations between US and Malaysia,” said Oh Ei Sun, a senior fellow at the Singapore Institute of International Affairs (SIIA).
When asked whether Ng’s return to Malaysia could be leveraged as a political win for Anwar at a moment when fugitive Low has continued to elude Malaysian authorities, Oh agreed it would, “if the Anwar administration could play the public relations game well, as such. Otherwise, many in Malaysia and beyond have largely forgotten about the whole 1MDB saga.”
Rewcastle-Brown told Asia Times that the original government-to-government extradition agreement inked after Ng’s 2018 arrest in Malaysia “was based on an agreement that Ng would be returned once prosecuted so that Malaysia could then pursue its own investigations and prosecutions, and Malaysia deserves to see that commitment fulfilled.”
Penang-born Low is widely seen as the alleged mastermind behind the 1MDB scandal, which he denies. In May, Malaysia’s anti-graft agency reiterated their belief that he is hiding in China’s gambling hub Macau. While Anwar has said his government is “determined” to bring Low into custody, the premier has said he is not “certain” of his whereabouts.
Azam Baki, chief commissioner of the Malaysian Anti-Corruption Commission (MACC), candidly told reporters earlier this month that in his opinion, the country was “still far from” detaining Low after managing to secure the breakthrough return of fugitive Jasmine Loo Ai Swan, who surrendered to Malaysian authorities in July after reaching an undisclosed settlement deal.
Baki said anti-graft officials earlier this month began interrogating former 1MDB lawyer Loo, who investigators believe acted as a proxy for Low. Loo reportedly reached out to Anwar’s administration with pledges to return 1MDB-related funds and assist in expediting its asset recovery efforts in exchange for a legal settlement of her criminal charges.
In March, the MACC said 28.93 billion ringgit ($6.1 billion), or around 70% of assets and funds from 1MDB pilfered between 2009 and 2014, have been recovered as part of a globe-spanning probe involving at least six countries including Singapore, Switzerland and the US.
Anwar has declined to reveal publicly how much money Malaysia has received from Goldman Sachs to date.
Nile Bowie reported from Singapore. Nick Kochan reported from London.