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Goldman Sachs' 1MDB charges dropped by Malaysia after settlement

The US bank was discharged amounting to acquittal, according to court proceedings in Kuala Lumpur on Friday

Topics
Goldman Sachs | 1MDB scam | Malaysia

Hadi Azmi & Yantoultra Ngui | Bloomberg 

Traffic passes a 1Malaysia Development Berhad (1MDB) billboard at the Tun Razak Exchange development in Kuala Lumpur, Malaysia
FILE PHOTO: Traffic passes a 1Malaysia Development Berhad (1MDB) billboard at the Tun Razak Exchange development in Kuala Lumpur, Malaysia

has dropped criminal charges against Group Inc. units, a key step in the $3.9 billion settlement agreement that allows the bank to move on from the 1MDB scandal.

The US bank was discharged amounting to acquittal, according to court proceedings in Kuala Lumpur on Friday.

Malaysia’s prosecutors will also cease pursuing its case against Goldman Sachs’s 17 current and former directors, according to people familiar with the matter, who asked not to be named as the information is private. That excludes Tim Leissner and Roger Ng, in line with the settlement agreement the bank struck with

The moves mark progress in Goldman Sachs’s efforts to resolve its worst scandal since the financial crisis as it grapples with separate discussions with the US Department of Justice for a settlement over 1MDB.

As part of the deal with Malaysia, the bank had paid $2.5 billion in cash to last week and pledged to guarantee the return of $1.4 billion from 1MDB assets seized around the world over the coming years. In exchange, Malaysia would drop criminal charges against the bank’s units over accusations that they misled investors in raising billions of dollars for 1MDB while allegedly knowing the funds would be misappropriated.

Legal Reserves

had to boost its legal reserves by $2.01 billion to account for the Malaysia settlement, shaving its second-quarter net income by 85% and wiping out what had been a surprise jump in profit due to trading gains.

The bank’s settlement doesn’t affect Malaysia’s claims against other people including Low Taek Jho, the scandal’s alleged mastermind known as Jho Low, and other parties. Prosecutors seek to bring former banker Roger Ng, who’s in the US to face 1MDB-related charges, back to Malaysia in November to face similar accusations. Ng’s next case mention date is set for Sept. 10.

The scandal surrounding 1MDB had led to the ouster of Malaysia’s former premier Najib Razak in 2018 and triggered corruption investigations in at least 10 countries including Singapore and Switzerland. Najib was found guilty of corruption last month and sentenced to 12 years in prison in the first trial over the scandal to reach a conclusion, while Jho Low remains at large.

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First Published: Sat, September 05 2020. 02:36 IST
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