Economy Wealth Management

Goldman Sachs offered $241 million to settle 1MDB, says Mahathir

Prime Minister Mahathir Mohamad/Bloomberg

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The lender earned about $593 million for its work on the 1MDB debt sales, which exceeded what banks typically make from government deals.

Sunday 23, June 2019

(Bloomberg) -- Prime Minister Mahathir Mohamad said that Goldman Sachs Group offered Malaysia MYR 1 billion ($241 million) as compensation for the role it played in raising funds for 1MDB that were later allegedly misappropriated, calling the amount little compared with the huge killing that the bank made.

Mahathir said that reasonable sum would amount to the commission that the Goldman received in raising $6.5 billion of bonds for 1MDB.

Goldman arranged the sales for 1MDB in 2012 and 2013. The bank’s revenue from the deals amounted to about 7.7 per cent of the face value of the securities and underwriters collected average fees of 1.32 per cent in 2013 on comparable deals.

Goldman officials have said for years that the bank raised money for 1MDB without knowing that it would be diverted from the development projects. As for the fees and commissions, Goldman stated that in 2015 that they reflected the underwriting risks it had assumed.

The bank is facing scrutiny in the US, Malaysia and Singapore over its role helping 1MDB raise money.

Malaysia has filed criminal charges against three Goldman entities, while US prosecutors have charged two former bankers at the firm.

Additionally, Singapore is planning to seek a deferred-prosecution agreement with Goldman.

In May, Mahathir said he was awaiting a response from Goldman before deciding whether to take legal action against the bank over too high fees on 1MDB bond sales.

Malaysia had already announced criminal charges against Goldman in December, accusing the lender of misleading investors when it knew that funds raised from the bond offerings it arranged would be misappropriated.

However, Goldman Sachs stated that it will defend itself against these allegations, the bank is trying to depict two of its former top bankers as rogue employees who kept the firm in the dark about their 1MDB dealings.

 

TAGS : Goldman Sachs Group, 1MDB, US prosecutors, Prime Minister Mahathir Mohamad

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