Goldman Sachs pays off $2.5b to Malaysia to settle 1MDB scandal
Funds will be of great help to Malaysia at a time when pandemic has cratered economy
Kuala Lumpur: Goldman Sachs Group has made the $2.5 billion payment it pledged to the Malaysian government to settle allegations of misconduct related to 1MDB. The funds will be used to repay outstanding debt of the disgraced sovereign wealth fund.
The government received the funds in its escrow account on Thursday. Malaysia plans to use the money to help repay 1MDB's outstanding debt, including $3.5 billion of bonds due in 2022 and 2023, which are now held under the finance ministry.
The payment is part of an agreement Goldman Sachs reached with Malaysia to pay $2.5 billion in cash and guarantee the return of $1.4 billion from 1MDB assets seized around the world. In return, Malaysia will drop criminal charges against the US bank, allowing it to start moving beyond one of its worst scandals since the financial crisis.
Much needed
The money comes at an opportune time for Malaysia, which is seeking funding to shore up an economy battered by the pandemic. The government is set to boost its debt limit for the first time since 2009 to help fund its $70 billion of stimulus measures.
Goldman Sachs will have a case management hearing over its criminal charges at a Malaysian court on September 4, a date that was set before the July deal was struck.