Goldman Sachs Faces Potential Lawsuits As Malaysia's PM Targets 1MDB Settlement

Malaysia’s Prime Minister, Anwar Ibrahim, is adamant about retrieving the funds Malaysians are due from the infamous 1MDB money laundering scandal, hinting at the possibility of lawsuits against Goldman Sachs (NYSE:GS).

According to a CNBC report on Sunday, Anwar criticized Goldman Sachs for its lack of cooperation and stated that the bank was involved in the crime. He suggested that renegotiating the settlement was necessary and did not rule out initiating legal proceedings.

In July 2020, Goldman Sachs reached an agreement to repay $3.9 billion to Malaysia in exchange for the withdrawal of criminal charges related to the 1MDB scandal. However, the current administration led by Anwar has disputed this amount, arguing that it is insufficient.

Anwar commended Malaysian authorities for effectively recovering as much as 68% of the entire amount embezzled during the 1MDB scandal. Nevertheless, he emphasizes that their endeavors mustn’t conclude at this point.

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While negotiations with Goldman Sachs are ongoing, Anwar acknowledges the complexity of the situation and the potential cost of lawsuits in the U.S.

Within the framework of the $3.9 billion agreement, Goldman Sachs agreed to a cash payout of $2.5 billion and committed to ensuring the restitution of at least $1.4 billion from the confiscated assets associated with the 1MDB scandal.

However, both parties disagree on whether the Malaysian government has recovered at least $500 million as of August last year, and whether an interim payment was due. Goldman Sachs has suggested that any dispute would be settled by arbitration.

It remains uncertain how the standoff between Malaysia and Goldman Sachs will conclude. The bank is obliged to return at least $1.4 billion in recovered assets to Malaysia by August 2025.

Price Action: As of the last trading session, Goldman Sachs stock closed at $324.93.

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