Opposition calls for disclosure of Goldman Sachs settlement terms

Without full disclosure, Malaysians cannot properly assess the true value of the compensation


SUBANG MP Wong Chen (picture) became the latest lawmaker to call for a full disclosure of the government’s settlement agreement with Goldman Sachs Group Inc, following pressures by former Finance Minister Lim Guan Eng for a detailed explanation on the deal over the weekend.

Wong said the Finance Ministry has to make public the terms involved in the US$3.9 billion (RM16.57 billion) agreement, especially on what the US investment bank is guaranteeing. With the cost of the 1Malaysia Development Bhd (1MDB) scandal estimated to be at least RM50 billion, he said the settlement is not a final solution.

The settlement agreed on last Friday included US$2.5 billion cash payout by Goldman Sachs and a guarantee to return US$1.4 billion in assets linked to 1MDB bonds, said Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz. In turn, the government will drop its criminal and regulatory investigations into the bank.

Wong demanded the minister to reveal efforts that the Wall Street giant is putting in to recover the said amount and if the sum guaranteed consisted of assets recovered by the US government or those it has committed to recover.

“Without full disclosure to these questions, Malaysians cannot properly assess the true value of the compensation,” he told reporters in Parliament yesterday.

“The finance minister also has to fully disclose what are the legal implications to Goldman Sachs in terms of criminal liabilities. The government should not allow persons directly involved in criminal activities to get away with just a financial penalty.”

Goldman Sachs arranged US$6.5 billion in bonds for 1MDB in 2012 and 2013, earning more than US$600 million in fees. Local authorities claimed that Goldman Sachs secured the work with the help of bribes arranged by two former bank employees and others.

Wong had also urged the government to state their efforts in recovering money from fugitive financier Low Taek Jho, or better known as Jho Low, who has been identified as the alleged mastermind of the fraud, and his associates.

Bagan MP Lim on Sunday said the government has to prove that it has not shortchanged the public. He said the previous Pakatan Harapan government had claimed US$7.5 billion from Goldman Sachs, to include an additional US$1 billion to cover interest cost incurred for the bonds to date.

“To forgo the initial US$7.5 billion claims with only US$3.9 billion ignores the huge debt burden of 1MDB. The total debt outstanding guaranteed by the government is RM31.7 billion. If the remaining interest payments until 2038 are included, the amount would increase to RM41.5 billion.

“This sum excludes the RM8.9 billion which have already been paid by the government. This would bring the total cost to the country, including interests from the debts, to RM50.4 billion,” Lim said.

Malaysian prosecutors filed charges in December 2018 against three Goldman Sachs units for misleading investors over bond sales amounting to US$6.5 billion that the bank helped raise for 1MDB.

Goldman Sachs has consistently denied wrongdoing, saying that certain members of the government and 1MDB lied to it about how proceeds from the bond sales would be used. The units of Goldman Sachs pleaded not guilty to the charges.