Malaysia is exploring the possibility of initiating legal proceedings against foreign banks implicated in the massive 1Malaysia Development Berhad (1MDB) corruption scandal, according to Johari Abdul Ghani, the chairman of the 1MDB asset recovery task force.
As per a Reuters report, Ghani did not disclose the names of the foreign banks but asserted that they failed to conduct adequate due diligence before facilitating fund transfers linked to the sovereign fund. The 1MDB scandal, involving an estimated $4.5 billion misappropriation, has ensnared figures such as former Malaysian Prime Minister Najib Razak, Goldman Sachs staff, and officials at the highest levels. Najib is currently serving a 12-year jail sentence for his role in the scandal.
“The 1MDB task force is firmly committed to addressing the 1MDB matter transparently and holding all parties accountable,” emphasised Ghani in a statement.
In a related development, Ghani disclosed that Malaysia responded on November 8 to an arbitration request from Goldman Sachs. The two parties are presently in the process of agreeing on a procedural timetable. Goldman Sachs had previously agreed to a $3.9 billion settlement in 2020 to resolve Malaysia’s criminal probe into its involvement in the 1MDB scandal.
However, disputes have arisen over the settlement terms, particularly regarding an interim payment clause. Goldman insists on an interim payment if Malaysia fails to recover at least $500 million from the firm by August 2022. This discrepancy has led to legal actions, with Goldman suing Malaysia in a British court, alleging a breach of the settlement agreement. Malaysia vehemently denies these allegations.
(With inputs from Reuters)
