Finance Minister Tengku Aziz says Malaysia will not accept even a $3 billion out of court settlement against Goldman Sachs. The government will, instead, pursue the case as long as Goldman Sachs (GS) does not offer an amount it can accept.
“We are continuing our pursuit to get some money from GS. Since the legal case is ongoing, we will have to wait for the outcome of that,” Tengku told Reuters. “If it’s $2 billion, I can say, no. $3 billion, no.”
Malaysia charged Goldman Sachs and 17 directors for misleading investors over bond sales worth $6.5 billion for the sovereign wealth fund. Bloomberg reports that the project, aimed at attracting foreign investment, instead attracted both criminal and regulatory investigation over financial deal-making and political patronage.
1MDB attracted $12 billion in debt instead of investment, which largely seeped through crevices of shell corporations and convoluted transactions to finance spending frenzies by government officials.
Goldman Sachs earned $600 in fees for three bonds that raised $6.5 billion. This is 7.7% of the value of securities, a far cry from 1.32% average fees for underwriters then. Sachs’ lead banker, Tim Leissner, revealed to authorities that he bribed officials to acquire the deal. Moreover, he further confesses that he and his colleagues arranged the fundraising as a debt offering to raise higher fees.