Finance minister defends ‘significantly better deal’ with Goldman Sachs

Finance Minister Tengku Zafrul Aziz says the settlement with Goldman Sachs last week is an ‘advantageous deal’.

PETALING JAYA: Finance Minister Tengku Zafrul Aziz has defended Putrajaya’s settlement with Goldman Sachs over bond transactions it arranged for 1MDB, calling it a “significantly better deal”.

Tengku Zafrul told The Edge that Goldman Sachs had previously offered “US$1.75 billion less US$164 million in taxes”.

He said the net amount offered amounted to only US$1.586 billion.

This meant Malaysia will now receive more cash and a higher asset guarantee.

“With this settlement, the people of Malaysia are getting back substantially more than what was offered before,” the financial news outlet quoted him as saying.

Goldman Sachs had last month agreed to a total settlement of US$3.9 billion.

The settlement includes cash payment of US$2.5 billion and a guarantee of a full recovery value of at least US$1.4 billion in assets traceable to the diverted proceeds from the three bond transactions.

Critics, including former prime minister Dr Mahathir Mohamad and former finance minister Lim Guan Eng, argue that the government is being shortchanged.

Tengku Zafrul also rejected claims that Malaysia was not likely to get any money from assets or that it would return to the country in any event, stressing the deal was not an “illusionary guarantee”.

He pointed out that various assets which were seized had been sold below their original price, citing the Bombardier jet as an example.

The jet was valued at US$35.37 million but was eventually sold for US$137,615, of which Malaysia received only US$136,505.

“This guarantee transfers that risk to Goldman Sachs and ensures that any loss suffered by Malaysia will be reduced,” he said.

Tengku Zafrul also said that while it would have been “attractive” to fight for “billions of ringgit more”, there was a huge difference between what a claiming party demanded and what it would eventually receive.

He explained that in the end, it depended on the courts and legal factors, among others, which was why Putrajaya decided to go with the settlement instead.

He said Malaysia chose the responsible and pragmatic approach over a popular one.

“Compared to what was offered previously, it was a good deal, and more. It was an advantageous deal,” he said.