In an interview with the Financial Times, Malaysian Prime Minister Mahathir Mohamad said he's not ready to kneel down and accept Goldman Sachs's first offer in its attempt to settle a civil case stemming from the bank's involvement in the 1MDB scandal, one of the biggest financial frauds to rock the region in modern history.
As was rumored in earlier reports, Goldman offered Malaysia "less than $2 billion" to settle the suit. In a series of three bond offerings, Goldman raised $6.5 billion for 1MDB, a sovereign wealth fund that was supposed to finance major public works projects across Malaysia.
But the money never made it that far.
A group of senior government officials, including former Prime Minister Najib Razak, led by shadowy financier Jho Low, looted billions from 1MDB and hid it from the people of Malaysia. How much did they take? The DoJ put the number at $4 billion; Malaysia believes its closer to $6 billion.
Mohamad said that Malaysia's negotiators (led by AG Tommy Thomas) are still talking with Goldman.
"Goldman Sachs has offered something like less than $2bn," Mahathir Mohamad told the Financial Times in an interview on Friday. "We are not satisfied with that amount so we are still talking to them...If they respond reasonably we might not insist on getting that $7.5bn."
And he's not stopping there. Mohamad said Malaysia has also reached out to DB and UBS over their involvement with 1MDB, as it strives to work with whatever banks it can to recoup any money stolen from 1MDB. DB has also found itself caught up in the criminal end of the scandal: Malaysia is investigating the recidivist German lender over whether it violated AML statutes while raising $1.2 billion for 1MDB back in 2014 (a deal that came after offerings underwritten by Goldman). UBS has been reprimanded by the Swiss government over transactions related to 1MDB that the bank helped facilitate.
Goldman earned more than $600 million in fees from the 1MDB deal, and Malaysia has made it clear that it wants every cent of that money returned.
But US prosecutors have already seized billions of dollars in assets pertaining to the case. On Thursday, reports emerged claiming that Low, now a fugitive believed to be hiding in China under the Communist Party's protection, has settled a flurry of civil suits with the DoJ, agreeing to hand over more than $900 million. Mohamad said Malaysia isn't in contact with Low, who admitted no guilt in his deal with the US. Malaysia doesn't know where Low is: "He's not staying in any one place."
"The amount [Mr Low embezzled from 1MDB] is much bigger," said Mr Mahathir. "If he had the full amount we would be very happy...We are still going after the rest of the money."
"The DoJ has indicated that, if we can prove claim of ownership, then we will be able to get the money for ourselves."
Goldman's strong earnings over the past two quarters have helped ease investors' worries about 1MDB, and the scandal has largely faded into the background since late last year, when revelations that senior Goldman execs, including Lloyd Blankfein, had personally intervened to greenlight the 1MDB deals despite numerous red flags from compliance. But we imagine that many insiders are waiting for the next shoe to drop. Right now, prosecutors have the leverage. Goldman just might get stuck paying the bulk of Malaysia's ask.
Both Malaysia and the US have accused senior Goldman bankers of bribing corrupt Malaysian politicians to secure the bond deal business for the bank.