Goldman Sachs to Pay $3.9 Billion to Malaysia to Resolve 1MDB Criminal and Regulatory Proceedings
25th July 2020 | Hong Kong
Goldman Sachs has agreed to pay $3.9 billion to the Government of Malaysia to resolve all 1MDB criminal and regulatory proceedings. The in-principle agreement to pay $3.9 billion to the Government of Malaysia, comprises of $2.5 billion direct payment and a further guarantee of at least $1.4 billion of assets that had been seized by governments worldwide.
” Goldman Sachs to Pay $3.9 billion to Malaysia Government “
With the $3.9 billion settlement, the Government of Malaysia will withdraw all criminal charges and no further charges will be brought against Goldman Sachs, its subsidiaries, or any of their employees, except for former employees Tim Leissner and Roger Ng.
Goldman Sachs $6.5 billion Bonds Underwriting
This in-principle agreement settles Malaysia’s probe of Goldman Sachs role in raising $6.5 billion through 3 bond sales for 1MDB between 2012 and 2013. The $6.5 billion bond sales was led by Tim Leissner, who was Goldman Sachs Southeast Asia Chairman. The leading American investment bank received $600 million in fees, representing more than 9% of the transaction. The more than 9% underwriting fee of the $6.5 billion bond sales paid to Goldman Sachs is unusually high in investment banking, with fees generally decreasing as the deal size gets larger.
With the settlement of $3.9 billion by Goldmans Sachs, $4.5 billion had been recovered to the Government of Malaysia. In 2019, Goldman Sachs had offered $1.75 billion to the Government of Malaysia as settlement.
Founded in 2009 shortly after Najib Razak became Malaysia’s Prime Minister, 1MDB (1Malaysia Development Bhd) was set up as a sovereign investment fund to finance infrastructure projects and related economic projects to spur economic growth in Malaysia.
It became a political and financial scandal as the key businessman Jho Low who is believed to have masterminded the plan, had diverted the 1MDB funds to fund his personal and associates’ lifestyle, including making the Hollywood movie: Wolf of Wall Street, buying a $250 million yacht (Equanimity) and $35 million Bombardier private jet, giving lavish gifts to Victoria secret model Miranda Kerr and Hilton hotel heiress Paris Hilton, investing in luxury real estates, paintings and many more.
Tengku Dato’ Sri Zafrul Aziz, the Minister of Finance:
“This settlement represents assets that rightfully belong to the Malaysian people. We are confident that we are securing more money from Goldman Sachs compared to previous attempts, which were far below expectations.
We are also glad to be able to resolve this outside the court system, which would have cost a lot of time, money and resources. With this settlement, we will have the return of the monies expedited, and not held up by lengthy and costly court battles and legal process.”
Goldman Sachs is founded in 1869 and is one of the world’s leading bank and investment bank. It is listed on New York Stock Exchange (NYSE) with a market capitalization of $69.2 billion (24/7/20). In 2019, Goldman Sachs reported total revenue of $36.5 billion and $8.4 billion profit.
2019 Revenue Breakdown
- Global Markets: 40% ($14.7 billion)
- Asset Management: 25% ($8.9 billion)
- Investment Banking: 21% ($7.6 billion)
- Consumer & Wealth Management: 14% ($5.2 billion)
- Total: $36.5 billion
2019 Investment Banking Revenue Breakdown
- Financial Advisory: $3.2 billion
- Underwriting: $3.6 billion
- Corporate Lending: $801 million
- Total: $7.6 billion
The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial centers around the world.