US investment bank Goldman Sachs on Friday reached a $3.9bn (€3.35bn) settlement with Malaysia over the multi-billion-dollar 1MDB scandal that will see all criminal charges against the bank dropped.
The deal includes a $2.5bn cash payout by Goldman and a guarantee by the bank to return at least $1.4bn in proceeds from assets linked to sovereign wealth fund 1Malaysia Development Bhd (1MDB), the two sides said.
The settlement is the biggest reached so far in Malaysia's efforts to recover funds allegedly stolen from 1MDB, and is a big victory for the four-month old administration of Malaysian Prime Minister Muhyiddin Yassin.
"We are confident that we are securing more money from Goldman Sachs compared to previous attempts, which were far below expectations," Finance Minister Tengku Zafrul Aziz said in a statement, adding the deal would resolve all outstanding charges and claims against Goldman.
Malaysian and US authorities say about $4.5bn was stolen from 1MDB in an elaborate scheme that spanned the globe and implicated former Malaysian Prime Minister Najib Razak and Goldman, among others. Prosecutors said the money was used to buy artwork, including paintings by Van Gogh and Monet, luxury properties in New York and London and to fund the "Wolf of Wall Street" movie.
Malaysian prosecutors filed charges in December 2018 against three Goldman units for misleading investors over bond sales totalling $6.5bn that the bank helped raise for 1MDB.
According to the US Justice Department, Goldman earned $600m in bond sale fees.
Goldman's units pleaded not guilty to the charges, with the bank saying that certain members of the former Malaysian government and 1MDB lied to it about how proceeds from the bond sales would be used.
Shares in Goldman Sachs rose about 1pc in premarket trade.