Goldman Sachs has agreed to settle a lawsuit tied to its role in the controversial 1Malaysia Development Berhad (1MDB) affair, marking another development in the long-running global financial scandal.
The agreement was reached between the bank and its shareholders, with plans to submit the proposed settlement for preliminary approval no later than 20 May. The update was disclosed in a filing submitted to the Manhattan Federal Court on Wednesday. However, the terms of the settlement remain undisclosed, and the bank has declined to comment publicly.
Lawyers representing the shareholders, led by Swedish pension fund Sjunde AP-Fonden, also did not provide any statements on the outcome. The silence from both sides reflects the sensitive nature of the case, which has drawn global scrutiny over financial governance and accountability.
The 1MDB fund was established by former Malaysian Prime Minister Najib Razak to drive economic development, with involvement from fugitive businessman Low Taek Jho. Authorities in both Malaysia and the United States have alleged that approximately US$4.5 billion was misappropriated from the fund, with portions channelled through offshore accounts and entities linked to Jho Low.
Goldman Sachs played a key role in arranging US$6.5 billion worth of bond sales for 1MDB, earning an estimated US$600 million in fees. Shareholders have accused the bank of misleading them about its involvement, while promoting what was described as a robust risk management framework. The revelations led to a sharp decline in the bank’s share price as investors reacted to the scale of the alleged misconduct.
In 2020, Goldman Sachs agreed to pay US$2.9 billion in penalties and allowed its Malaysian subsidiary to plead guilty as part of a global settlement involving the US Department of Justice and other authorities. The case highlighted the far-reaching implications of financial misconduct and the importance of regulatory oversight in international banking.
A Brooklyn federal judge officially concluded the US criminal case against Goldman Sachs in May 2024, following the bank’s successful completion of a three-year deferred prosecution agreement. Meanwhile, one Goldman banker was convicted for assisting in the misappropriation of 1MDB funds, while another admitted guilt, underscoring individual accountability within the broader scandal.
