Goldman Sachs apology not enough: Malaysian Finance Minister insists on US$7.5b compensation

Goldman Sachs apology not enough: Malaysian Finance Minister insists on US$7.5b compensation

Lim Guan Eng interview Channel NewsAsia 2
Malaysia's Finance Minister Lim Guan Eng. (Photo: Lua Jiamin)

KUALA LUMPUR: The apology by Goldman Sachs is not sufficient and it has to compensate Malaysia considering the role played by its former banker in the 1Malaysia Development Berhad (1MDB) scandal, said Finance Minister Lim Guan Eng on Friday (Jan 18). 

This came after Goldman Sachs’ chief executive officer David Solomon apologised to the Malaysian people on Wednesday over the role of former banker Tim Leissner in the 1MDB case.

At a press conference, Mr Lim said that while Goldman Sachs' apology was necessary for Malaysia and its people, the bank must bear responsibility.

"Apology is not enough, but apology with US$7.5 billion, that's what matters," he said.

"Only when you pay reparation and compensation, that will be sufficient ... we are seeking US$7.5 billion."

READ: Malaysian finance minister hopes for ‘boring democracy’ with no financial scandals

Huge sums of public money were purportedly stolen from 1MDB and used to buy everything from yachts to artwork in a scheme that allegedly involved former prime minister Najib Razak and contributed to his government's shock election defeat in May 2018.

Najib has denied wrongdoing.

Goldman Sach's role is under scrutiny for reportedly helping arrange US$6.5 billion in three bond sales for 1MDB, with Kuala Lumpur accusing the bank and its former employees of misappropriating billions of dollars.

READ: 1MDB scandal: A timeline

After reporting Goldman Sach's fourth-quarter earnings on Wednesday, Mr Solomon said: "It’s very clear that the people of Malaysia were defrauded by many individuals, including the highest members of the prior government.”

David Solomon
File photo of David Solomon, president and chief operating officer of Goldman Sachs. (REUTERS/Shannon Stapleton)

Leissner, a former partner for Goldman Sachs in Asia, has pleaded guilty to conspiracy to launder money and violate the Foreign Corrupt Practices Act.

Beside Leissner’s involvement, Malaysian Ng Chong Hwa, a former managing director at the bank, was indicted in November.

Investigators believe stolen cash was laundered through the American financial system and US authorities are seeking to extradite Ng, who has claimed trial.

READ: Goldman Sachs CEO: I feel horrible ex-bankers broke law in 1MDB case

Last month, Malaysian prosecutors filed charges against Goldman Sachs in connection with its role as underwriter and arranger of the three bond sales, the first criminal action against the US bank over the scandal.

In addition to the total value of the bonds, Goldman Sachs should also return US$1 billion to cover US$600 million in fees and commissions for the deal and bond coupons that were "higher than the market rate", said the Malaysian government.

The bank has set aside US$1.8 billion to cover potential losses related to 1MDB legal proceedings.

Asked whether Putrajaya would drop the charges if Goldman Sachs paid the reparation, Mr Lim replied on Friday: “If they pay us US$7.5 billion, then we will discuss about it.”

"Goldman should understand the trauma suffered by the Malaysian people resulting from the 1MDB scandal," he added.

Source: Bernama/CNA/aw