Malaysia’s 1MDB campaign against Goldman Sachs shifts focus to law firms involved in reaching settlement deal

KUALA LUMPUR: Malaysia’s campaign against US banking giant Goldman Sachs is now expanding into the role played by local law firms that were involved in the negotiations of two highly secretive multi-billion-dollar settlement agreements tied to the 1Malaysia Development Bhd (1MDB) scandal.

Rosli Dahlan Sarvana Partnership (RDS Partnership) and Chetan Jetwani & Company are now locked in a potentially messy legal confrontation with the Malaysian Anti-Corruption Commission (MACC) over the surrender of documents and banking account details tied to the 1MDB matter.

The MACC raided the offices of the law firms two weeks ago, but the agency’s demands for documents related to the settlement negotiations were rebuffed on grounds of the client’s confidentiality. That in turn, forced the MACC to refer the matter to the courts.

Lawyers involved in the legal dispute said that the Malaysian High Court will hear arguments from both sides sometime in early November.

NEW QUESTIONS

But disclosures in court filings ahead of next week’s hearings reviewed by CNA are already raising more questions over the handling of the settlement deals by the previous government headed by former premier Muhyiddin Yassin with US banking giant Goldman Sachs and the country’s sixth largest banking institution AmBank Group.

Chief among them is why the Muhyiddin administration entered into a settlement with Goldman Sachs more than two months before the US banking giant entered into a deferred prosecution agreement with the Department of Justice in October 2020 where it pleaded guilty to conspiracy to violate the Foreign Corrupt Practices Act in the 1MDB scandal.  

The court filings have also revealed previously undisclosed information on the government’s settlement with AmBank, which was the principal local financial institution handling all 1MDB-related matters.

RDS Partnership had represented the Malaysian government in the Goldman Sachs and AmBank settlements, while Chetan Jetwani and Company was the counsel for the US banking giant in the settlement agreement negotiations.

A letter by RDS Partnership that was filed in court noted that the central bank, Bank Negara Malaysia, had cautioned Mr Muhyiddin, who served as premier for 17 months beginning March 2020, that publicly-listed AmBank should not be penalised more than RM600 million (US$125.9 million) “as anything more could cause the collapse of the banking system”.

The RDS Partnership letter further stated that its senior partner, lawyer Rosli Dahlan, who was the government’s chief private-sector negotiator, had entered into direct talks with AmBank’s management and succeeded in securing the payment of a fine amounting to RM2.8 billion as settlement in February 2021 for its role in the 1MDB scandal.

The letter did not state why AmBank agreed to a much higher fine.