US$7.5b an ‘extremely reasonable’ sum for Goldman Sachs to pay Putrajaya over 1MDB fiasco — Guan Eng

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KUALA LUMPUR (Jan 14): The US$7.5 billion compensation sought by Malaysia from Goldman Sachs for the 1MDB scandal is an ‘extremely reasonable’ amount, CNBC reported Finance Minister Lim Guan Eng as saying.
 
The sum considers the 1MDB bonds issue arranged by the American investment bank, which Lim reportedly said was “astronomical” and done in “very unfavourable” terms.  

According to a report by the Financial Times last December, Goldman Sachs helped arrange three 1MDB bonds worth US$6.5 billion 2012 and 2013 for a hefty fee of US$600 million. 

From the sum of the bonds issued, US$681 million was allegedly received by former prime minister Datuk Seri Najib Razak instead of being used for national development. 

“So we are looking at a sum, a reasonable sum that can compensate the agony and the trauma, as well as the losses that we suffered,” Lim was quoted by CNBC as saying. “I think 7.5 billion U.S. dollars is an extremely reasonable figure.”

Lim also reportedly called on the bank to “have a heart” and to mention in its annual report that it would “make some provisions for some reparation payments to Malaysia”.  

In response to Lim’s comments, Goldman Sachs Asia Pacific head of corporate communications Edward Naylor reiterated that the charges against the bank is ‘misdirected’ and that it will ‘vigorously’ defend against them.  

Naylor was likely referring to criminal charges filed by the current Malaysian government against Goldman Sachs Group Inc last month. 

At that time, Attorney General Tommy Thomas said in a statement that it is seeking jail terms and billions in fines from Goldman Sachs and four individuals who were allegedly involved with diverting 1MDB funds away from the fund. 

CNBC, in response to Lim, quoted Goldman Sachs as saying it was a victim of lies by various parties, including 1MDB and members of the previous Barisan Nasional government. 

The bank also argued it was not given a chance to speak, before charges were filed against some of its entities.  

"What we earned from the debt transactions reflected the risks we assumed at the time, specifically movement in credit spreads tied to the specific bonds, hedging costs and underlying market conditions," Goldman reportedly said.  

"Comparisons to 'fees' from plain vanilla underwritings, which involve far less risk, are not relevant,” it added.