Goldman Sachs Agrees $3.9 Billion 1MDB Settlement

The deal, reached on Friday, involves a payment of $2.5 billion cash payout by Goldman Sachs Group Inc. to the Malaysian government and a further be certain that Goldman Sachs will return “at least $1.4 billion in proceeds from assets associated with 1MDB seized by governmental authorities round the world,” according to an argument in the investment bank.

In return, Malaysia will drop all criminal and regulatory proceedings against Goldman Sachs, including outstanding proceedings against its subsidiaries and its current and former directors.

The settlement pertains to Goldman Sachs' alleged role in an international scandal relating to the 1Malaysia Development Berhad, a situation sovereign wealth fund and the investment bank's client. Goldman Sachs arranged and underwrote bond sales for 1MDB totalling around $6 billion, and allegedly failed to act while $4.5 billion was stolen from the fund.

Money siphoned from 1MDB flowed to some variety of causes, which allegedly included the purchasing of Van Gogh and Monet paintings and also the financing from the Hollywood hit The Wolf of Wall Street. $731 million seemed to be discovered in the bank account of Malaysia's then pm, Najib Razak, who also served as 1MDB's chairman.

Malaysia filed charges against 17 Goldman Sachs employees this past year, that the investment bank called “misdirected”.

“This settlement represents Goldman's acknowledgment of the misconduct of a couple of its former employees in the broader 1MDB fraudulent and corruption scheme,” said Malaysia's finance ministry inside a statement on the deal.

Goldman Sachs has yet to resolve an ongoing investigation through the US Department of Justice associated with the 1MDB scandal.