Goldman Sachs’ suit against govt premature and lacking due consideration: Johari Ghani

By MT Webmaster On Oct 12, 2023

(NST) – Goldman Sachs’ arbitration against the government is premature and lacking due consideration of necessary prerequisites, according to the chairman of 1MDB Taskforce (Asset Recovery) Datuk Seri Johari Abdul Ghani.

At this stage, all parties are still expected to be engaged in “amicable good faith discussions”, he added.

Commenting on the news on Oct 11 regarding Goldman Sachs filing for arbitration against the government on the 1MDB settlement, Johari said: “The 1MDB taskforce committee is quite surprised at the conduct of Goldman Sachs as parties are still in the stage of good faith discussions to resolve any dispute amicably.

“However, in light of recent events, the government will be preparing to respond to this matter and ensure that this process is done diligently and in accordance with the established legal frameworks while ensuring that the interest of the Malaysian people is safeguarded,” he said in a statement today.

Johari said the arbitration appears to be an attempt by Goldman Sachs to divert attention away from its obligation to adhere to the interim payment of US$250 million required under the settlement agreement.

Nevertheless, he reiterated that in relation to these proceedings, the government will respond accordingly.

Johari provided a clear account of the significant events concerning the Goldman Sachs settlement agreement to ensure that the public is well-informed about the current situation.

The settlement agreement was signed on Aug 18, 2020.

It consisted of two parts: (i) a cash payment of US$2.5 billion to be made within 10 days from the signing of the settlement agreement, and (ii) an asset recovery guarantee of US$1.4 billion by Goldman Sachs to be fulfilled within five years from the date of the settlement agreement.

Under the US$1.4 billion asset recovery guarantee, if the government did not recover the sum of US$500 million by Aug 18, 2022 (two years from the signing of the settlement agreement), Goldman Sachs would be required to pay US$250 million as an interim payment to the government.

On Aug 18, 2022, the accounting provided by the government to Goldman Sachs showed that it had not recovered US$500 million, and hence the government is entitled to the interim payment of US$250 million.

This was disputed by Goldman Sachs.

The settlement agreement allowed parties to engage in “Amicable Good Faith Discussions” for the period of three months if a dispute relating to the settlement agreement arose.

Four separate extensions were granted to Goldman Sachs by the government upon the expiry of the initial Aug 18, 2022 deadline to try and amicably settle this dispute.

The four extensions that were given are as follows: (a) Goldman Sachs requested an extension of time of three months on Sept 8, 2022, and this extension expired on Dec 8, 2022 (first extension); (b) On Dec 8, 2022, a further extension was given, and this extension expired on Feb 8, 2023 (second extension); (c) On Feb 8, 2023, another extension was given, and this expired on May 8, 2023 (third extension); and the last extension was given on Aug 8, 2023, and this is set to expire on Nov 8, 2023 (fourth extension).

The current deadline for the latest extension expires on November 8, 2023, and if a settlement is not reached between the parties by this deadline, the government can commence arbitration proceedings in respect of the interim payment of US$250 million.

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Press Statement of Chairman of 1MDB Taskforce (Asset Recovery) in response to Goldman Sachs filing for arbitration against the Government of Malaysia

I refer to the news on 11 October 2023 regarding Goldman Sachs filing for arbitration against the Government of Malaysia on the 1MDB Settlement. The 1MDB Taskforce Committee is quite surprised at the conduct of Goldman Sachs as parties are still in the stage of good faith discussions to resolve any dispute amicably. However, in light of recent events, the Government of Malaysia will be preparing to respond to this matter and ensuring that this process is done diligently and in accordance with the established legal frameworks while ensuring that the interest of the Malaysian people is safeguarded.

To ensure that the public is fully informed on the current situation, the following are important sequence of events that has taken place regarding the Goldman Sachs settlement agreement.

Goldman Sachs Settlement Agreement was signed on 18 August 2020 and consist of 2 parts:-

(i) Cash Payment of US$2.5 billion paid 10 days from signing of the settlement agreement; and

(ii) Asset Recovery Guarantee of US$1.4 billion by Goldman Sachs within 5 years from the date of the settlement agreement.

1. Under the US$1.4 billion Asset Recovery Guarantee by Goldman Sachs, if the Government of Malaysia did not recover the sum of US$500 million by 18 August 2022 (two years from the signing of the settlement agreement), Goldman Sachs would be required to pay US$250 million as Interim Payment to the Government of Malaysia.

2. On 18 August 2022, the accounting provided by the Government of Malaysia to Goldman Sachs showed that it had not recovered US$500 million and hence the Government of Malaysia is entitled to the Interim Payment of US$250 million. This was disputed by Goldman Sachs.

3. The settlement agreement allowed Parties to engage in Amicable Good Faith Discussions for the period of 3 months if a dispute relating to the settlement agreement arose.

4. 4 separate extensions were granted to Goldman Sachs by the Government of Malaysia upon expiry of the initial 18 August 2022 deadline to try and amicably settle this dispute. The 4 extensions that were given are as follows: –

(a) Goldman Sachs requested for extension of time of 3 months on 8 September 2022 and this extension expired on 8 December 2022 (1st extension);

(b) On 8 December 2023, a further extension was given and this extension expired on 8 February 2023 (2nd extension);

(d) The last extension was given on 8 August 2023, and this is set to expire on 8 November 2023 (4th extension).

5. The current deadline for the latest extension expires on 8 November 2023, and if a settlement is not reached between the parties by this deadline, the Government of Malaysia can commence arbitration proceedings in respect of the Interim Payment of US$250 million.

6. At this juncture, and as mentioned above, parties are still considered to be in the Amicable Good Faith Discussions stage and therefore as an aggrieved party, the 1MDB Taskforce views Goldman Sachs’ initiation of arbitration proceedings as premature and without due consideration of necessary prerequisites.

7. Goldman Sachs’ action of initiating arbitration proceedings also appear to be an attempt to detract and divert attention away from their obligation to adhere to the Interim Payment of US$250 million requirement under the settlement agreement. Nevertheless, in relation to these proceedings, the Government of Malaysia will respond to this matter accordingly.