Malaysia is contemplating the initiation of legal proceedings against foreign banks connected to the multi-billion dollar 1Malaysia Development Berhad (1MDB) corruption scandal, as revealed by Johari Abdul Ghani, the chairman of the 1MDB asset recovery task force on Tuesday.
Johari Abdul Ghani did not disclose the names of the foreign banks under scrutiny but asserted that these institutions failed to carry out adequate due diligence before facilitating fund transfers related to the sovereign fund. The move signifies Malaysia’s determination to hold financial entities accountable for their role in the 1MDB scandal.
As per the Malaysian and U.S. investigators, an estimated amount of $4.5 billion was stolen from the 1Malaysia Development Berhad (1MDB) implying a former Prime Minister of Malaysia, Goldman Sachs staff, and high-level officials somewhere else. Malaysia, in the year 2021, sued the units of Deutsche Bank, JP Morgan, and Coutfs & Co, to recover billions in alleged losses from funds. Though in court these cases have yet to progress.
Johari Abdul Ghani stated, “The 1MDB task force is firmly committed to addressing the 1MDB matter transparently and holding all parties accountable.” He also separately added that Malaysia had responded to an arbitrary request by Goldman Sachs on November 8. Post this the two parties were in the process of agreeing on a procedural timetable. In the year 2020, Goldman Sachs had coincided to pay $3.9 billion to settle the criminal probe of Malaysia over its role in the scandal. But eventually, now the parties no longer agree to the settlement, which stipulates that Goldman Sachs should make an interim payment if Malaysia, by August 2022, did not recover at least $500 million from the firm.
Meanwhile, Malaysia was sued by Goldman in a British court in October last year. It is due to the government of Malaysia violating its obligations to properly and appropriately credit assets against the guarantee provided by Goldman in the settlement agreement and also to recover the other assets that were worth $1.4 billion. But Malaysia has firmly denied the allegations of settlement deal breaching and instead accused Goldman Sachs of trying to offset 1MDB fines, settlements recovered from other different institutions like AmBank, and Abu Dhabi’s International Petroleum Investment Co (IPIC) against $1.4 billion.
The 1MDB task force was examining if negotiators and lawyers, who were representing the government of Malaysia at the time, in any way failed to secure a fair settlement and also adequate settlement from Goldman. Johari Abdul Ghani also asserted, “Such lapse on the part of negotiators and lawyers, in failing to negotiate a fair and clear settlement agreement has compromised the government of Malaysia’s position in the ongoing dispute.”