Former Malaysian prime minister Najib Razak.Credit:AP
It's unclear how the settlement with Malaysia will impact discussions between Goldman Sachs and the US Justice Department. The bank is close to an agreement in the US after tussling over a potential guilty plea,Bloomberg News reported earlier this month.
The deal moves Goldman closer to ending its biggest legal threat since the darkest days of the 2008 financial crisis.
Goldman helped the Malaysian government raise $US6.5 billion for the 1MDB fund,collecting some $600 million in fees from bond sales in 2012 and 2013,according to court filings. Prosecutors allege that part of that money was diverted to 1MDB officials and their associates.
Goldman Sachs has reached a deal that would see Malaysia drop criminal charges against it.Credit:AP
Malaysian prosecutors brought charges against three units of the bank in 2018,then followed with additional accusations against Goldman's 17 current and former executives last year. The bank has consistently denied wrongdoing,saying that former Malaysian officials lied about how proceeds from the bond sales would be used.
The settlement is a major milestone for prime minister Muhyiddin Yassin,a step toward ending Malaysia's years-long effort to recover billions of dollars lost through the scandal.
In 2018,the affair led to the country's first change of government since its independence,when Mahathir Mohamad took over as Prime Minister from Najib Razak,who now faces multiple charges related to 1MDB.