KUALA LUMPUR: Prime Minister Datuk Seri Najib Razak said the commissions and fees earned by New York-based Goldman Sachs Group Inc in the issuance of bonds for 1Malaysia Development Bhd (1MDB) subsidiaries were “appropriate”.

“The yield obtained by Goldman Sachs from the bond issuance, fees and token is appropriate comparable to the size of the issuance, tenure, liquidity and credit risk because the bonds were issued at a regular discounted rate,” he said in a  Parliamentary written reply to Petaling Jaya Utara Member of Parliament Tony Pua yesterday. 

“Any differential in the issue price and the net yield of the bonds consists not only of the fees and other expenditure but also the effective yield which takes into account the discount and the remaining bond tenure,” said Najib.

Pua had asked Najib, who is the Finance Minister and chairman of 1MDB’s advisory board, to state the amount of commissions, fees and charges recorded in the prospectus at US$3 billion (RM10.98 billion), US$1.75 billion and US$1.75 billion for 1MDB Global Investment, 1MDB Energy and 1MDB Energy (Langat) Ltd respectively. The opposition lawmaker also asked the prime minister to state the amount paid as fees to Goldman Sachs and the discount provided to the bond investors.

On Tuesday, Najib had dismissed as “baseless” claims that 1MDB had paid high interest rates to Goldman Sachs to manage its RM5 billion Islamic bonds.

This article first appeared in The Edge Financial Daily, on March 26, 2015.