Malaysia To Goldman: Pay Us $7.5 Billion And We Will Drop 1MDB Charges

The Malaysian government has a message for Goldman Sachs CEO David Solomon: Your disingenuous, blame-deflecting apology for Goldman's role in one of the biggest financial frauds ever perpetrated in Asia isn't going to cut it.

According to Bloomberg, Finance Minister Lim Guan Eng told reporters on Friday that Malaysian prosecutors might consider dropping the criminal charges brought last month against the bank, several Asian subsidiaries and two of its employees (who have also been indicted in the US) if the bank agrees to pay back the total amount that the Malaysian government believes was looted during the fraud.

Malaysia

Finance Minister Lim Guan Eng

That amount? A staggering $7.5 billion.

"Goldman Sachs should understand the agony and the trauma suffered by the Malaysian people as a result of the 1MDB scandal," Lim said in the administrative capital of Putrajaya. "An apology is just not sufficient. Not enough. There must be the necessary reparations and compensations."

Earlier this week, Solomon apologized to the Malaysian people during an earnings call with analysts, where he blamed senior banker Tim Leissner (who is now believed to be cooperating with federal authorities to testify about the bank's "culture of corruption") for the scandal and claimed Malaysia was “defrauded by many individuals" who - as was implied - just happened to work at Goldman Sachs. 

Lim characterized Solomon's apology as "insufficient", presumably because media reports have revealed that senior Goldman execs, including former CEO Lloyd Blankfein blithely ignored concerns raised by the bank's compliance department and did everything in their power to court Malaysia's business (Blankfein himself was involved in several meetings with then-Prime Minister Najib Razak, who is now awaiting trial on corruptoin charges, and fugitive financier Jho Low, who is believed to have masterminded the scheme).

Goldman earned $600 million in fees on the $6.5 billion in bonds it underwrote for 1MDB, which was launched by Razak as a sovereign wealth fund intended to fund public works projects.

"At least he accepted that they have to bear and shoulder some responsibility," Lim said, referring to Solomon. "That apology of course goes some way toward that, but that is insufficient."

While Leissner is cooperating with authorities in the US, his former subordinate, senior Asian banker Roger Ng, is being held in Malaysia.

Of course, Lim, as the country's finance minister, isn't authorized to cut deals with Goldman. That authority is reserved by Attorney General Tommy Thomas, the country's top prosecutor, who brought the criminal case against Goldman.