CIJ blasts confidentiality clause excuse in 1MDB Goldman Sachs settlement

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CIJ blasts confidentiality clause excuse in 1MDB Goldman Sachs settlement
CIJ blasts confidentiality clause excuse in 1MDB Goldman Sachs settlement

The Centre for Independent Journalism (CIJ) is unhappy with what it calls a “lack of transparency and public accountability” following the decision of the Perikatan Nasional administration not to disclose details of the US$1.4 billion settlement between the government, 1MDB and Goldman Sachs (the “Parties”) because of “confidentiality clauses”.

According to a written parliamentary reply by de facto Law Minister Takiyuddin Hassan on Nov 17, the government cannot give access to the specifics of the agreement “to avoid any legal action being taken due to breach of the terms of the agreement”.

“CIJ questions why the State entered into the aforementioned agreement if it had such stringent confidentiality clauses in place that prevents disclosure,” said CIJ executive director Wathshlah G Naidu in a statement today.

"Surely the State and its actors are aware that such an agreement would undermine public interest, accountability and transparency as it means the contents of the agreements would not be subject to public scrutiny?

"This is especially pertinent given the misappropriation elements at play surrounding 1MDB, and which have been a matter of public interest," she said.

Furthermore, legitimate requirements of confidentiality would typically extend to non-disclosure of information crucial to negotiations regarding settlement terms and should reasonably be limited to the duration of the negotiation period, added Naidu (below).

She said CIJ takes note and is aware of the importance of protecting private and sensitive information from being arbitrarily revealed and subjected to abuse – for example, information that pertains to national security, defence and public order.

"However (the Government) must ensure that blanket assumptions about confidentiality do not become the norm and used as an “easy way” out to avoid sharing information that legitimately should and can be made public," she added.

It was reported in July that Goldman Sachs agreed to return US$4.5 billion (RM19 billion) with the first chunk of US$2.5 billion to be paid in two months.

The balance of US$1.4 billion (RM5.97 billion) would be paid after the assets related to the misappropriated proceeds from the transactions had been returned to the government.

Goldman Sachs was engaged by 1MDB to raise US$6.5 billion (RM27.72 billion) in bonds between 2009 and 2014.

In August last year, Malaysian prosecutors filed 17 criminal charges against Goldman Sachs related to the bond issue and various 1MDB dealings.

Following this, the bank offered to settle the matter.

Naidu also said Takiyuddin in his response had failed to justify if public interest and harm test principles were considered before the specific confidentiality clauses were agreed upon.

"In the absence of meeting the harm threshold, the interests of justice, in this case, should override the interests of the parties in maintaining confidentiality," she said, citing that the United Kingdom, Indonesia and Sri Lanka have made significant progress towards guaranteeing transparency and access to information through the adoption of Right to Information (RTI) legislation.

She called on the government to clearly state the terms of the “confidentiality” obligations and provide a legal justification on the following if the State fails to disclose and make public the terms of the settlement agreement:

i) the reasonable grounds and interests of the Parties in keeping the information on the settlement secret;

ii) why the non-disclosure requirements cannot be legitimately waived in the interest of the public;

iii) consequences or harms that would occur if the information is provided to the public;

iv) the duration the information must be kept secret, and;

v) the specific legal ramification or burden on a disclosing party.