Malaysia to investigate lawyers involved in Goldman Sachs-1MDB Deal

Malaysia’s anti-corruption agency has launched a probe into the lawyers who represented the government and Goldman Sachs in a settlement deal over the 1MDB scandal.

The Malaysian Anti-Corruption Commission (MACC) raided the offices of two law firms, Rosli Dahlan Sarvana Partnership (RDS Partnership) and Chetan Jetwani & Company, last week and seized documents related to the negotiations.

The MACC said it was investigating allegations of corruption and abuse of power in the settlement agreement, which was signed in August 2020 between the former government of Muhyiddin Yassin and the US investment bank.

The deal resolved charges in Malaysia that Goldman Sachs had misled investors when it helped raise $6.5bn for the state fund 1MDB, which was later plundered by corrupt officials and their associates.

A Corrupt Deal?

Goldman Sachs agreed to pay $2.5bn in cash and guarantee the recovery of $1.4bn in assets linked to the 1MDB funds. The bank also admitted to violating the US Foreign Corrupt Practices Act by paying bribes to Malaysian and Abu Dhabi officials to secure the bond deals.

However, the new government of Prime Minister Anwar Ibrahim, who took office in October 2023, has questioned the terms and transparency of the settlement, which was negotiated by former finance minister Tengku Zafrul Aziz and former attorney-general Idrus Harun.

The MACC said it had received information that some of the lawyers involved in the deal had received “excessive payments” and had “conflicts of interest”.

The lawyers have denied any wrongdoing and challenged the MACC’s actions in court, citing client confidentiality and legal privilege.

Rosli Dahlan, the senior partner of RDS Partnership, said his firm was appointed by 1MDB as its legal adviser and had acted in the best interest of the Malaysian people.

He said the MACC’s investigation was “false, baseless and politically motivated” and aimed at undermining the settlement agreement.

Chetan Jetwani, the founder of Chetan Jetwani & Company, said his firm was hired by Goldman Sachs as its local counsel and had no direct involvement in the negotiations with the government.

He said the MACC’s raid was “unlawful and unjustified” and violated his firm’s rights and reputation.

Both lawyers said they would cooperate with the MACC but would also seek legal remedies to protect their interests and clients.

The 1MDB scandal has triggered investigations and lawsuits in several countries, including the US, Singapore, Switzerland and the UK.

It also contributed to the downfall of former prime minister Najib Razak, who was convicted of corruption and money laundering in July 2020 and sentenced to 12 years in jail. He is appealing against his conviction and remains free on bail.