Ex-minister: Govt could have got more from Goldman Sachs if it wasn't hasty

The Perikatan Nasional government could have extracted more compensation from Goldman Sachs for its role in the alleged theft of 1MDB funds had it not been hasty, said former finance minister Lim Guan Eng.

Lim concurred with former attorney-general Tommy Thomas who yesterday said Goldman Sachs would have been under more pressure if the criminal cases against its bankers went to court, giving Malaysia a stronger bargaining power in the negotiations.

"Contrary to the finance minister's claim, it is the PN government which had taken a populist and unpragmatic move when the government hastily demanded payment early but at a far lower sum.

"The pragmatic move was as stated by Thomas, which was to wait for the criminal trial against Goldman Sachs to commence so that we could get a larger and more appropriate payment from Goldman Sachs," he said in a statement.

Finance Minister Tengku Zafrul Aziz yesterday defended Putrajaya's settlement with Goldman Sach which will see the bank forking out USD2.5 billion in cash and another USD1.4 billion guarantee for the recovery of assets allegedly acquired using stolen 1MDB funds.

Asked why the PN government did not pursue for USD7.5 billion as demanded by the previous Pakatan Harapan government, he said while the "illusion of fighting for billions" seemed more attractive, he opted for a pragmatic solution.

He had also criticised the criminal action brought by the previous government against Goldman Sachs, stating that the PN government's civil action was better and had resulted in the settlement.

Thomas had disputed this, stating that allowing criminal action to proceed would have put more pressure on Goldman Sachs. He also criticised the guarantee provided by the bank, pointing out that the recovery of those assets was already underway by the US Department of Justice.

Zafrul had also defended the guarantee, stating that Malaysia was exposed to valuation risks of the recovered assets while Goldman Sachs' guarantee would ensure a minimum sum for those recovered assets.

Lim, in his statement today, said he did not want to elaborate further on the matter as he wanted to see how the government responded to Thomas' criticism.

Goldman Sachs was responsible for arranging three bonds for 1MDB amounting to US$6.5 billion, a substantial sum of which was subsequently misappropriated.

The bank had said it did not know that the proceeds it arranged would be misappropriated and had apologised to Malaysians for the scandal.

“It’s very clear that the people of Malaysia were defrauded by many individuals, including the highest members of the prior government,” Goldman Sachs Group Inc chief executive officer David Solomon had said.