Goldman Sachs, the US investment bank, has agreed to pay the Malaysian government US$3.9bn to settle the 1MDB sovereign wealth fund fraud dating back to 2013.
The bank will pay back US$2.5bn in cash and has guaranteed to return assets worth US$1.4bn in exchange for the dropping of action against the bank in Malaysia.
Charges were laid against the bank in 2018 over its involvement in US$6.5bn worth of bond sales carried out by 1MDB of which a large chunk is said to have been siphoned off by a group including former Malaysian prime minister Najib Razak and financier Jho Low.
Goldman Sachs was accused of fraudulently promoting the bonds and misdirecting the proceeds as well as not acting to stop the misappropriation, which is said to have amounted to US$4.5bn of the money raised.
Prosecutors said the proceeds were used to buy yachts, artwork, New York condominiums and even helped to fund the Wolf of Wall Street movie.
Criminal charges have been brought against Razak and Low, while Tim Leissner, Goldman Sach’s head of Asia at the time of the scandal pleaded guilty in 2018 to conspiracy to launder money.
In a statement, Goldman Sachs said the settlement “is an important step towards putting the 1MDB matter behind us and will help enable the Malaysian government to move forward with additional recovery efforts and to execute on its economic priorities”.
“There are important lessons to be learned from this situation, and we must be self-critical to ensure that we only improve from the experience.”
Malaysia has already received a payment from the US Department of Justice and said the money from that and Goldman Sachs would be returned to its people.