MALAYSIA is considering initiating legal proceedings against banks related to the troubled 1Malaysia Development Berhad (1MDB) state fund, as the government works to recoup assets lost from the multibillion-dollar scandal.

“A number of foreign banks” facilitated fund transfers linked to 1MDB without conducting proper processes “at that material time”, Johari Abdul Ghani, who leads a taskforce to recover 1MDB assets, said. He did not identify the banks.

1MDB was a national strategic development company that took shape in 2009 and became the centre of probes spanning across continents.

Goldman Sachs Group, which helped to raise three bonds worth US$6.5 billion for Malaysia, admitted to its role in the biggest foreign bribery case in US enforcement history, reaching multiple international settlements exceeding US$5 billion.

Malaysia and Goldman are now locked in a dispute over a 2020 settlement the two struck, that requires the bank to pay US$2.5 billion in cash and provide the government with a US$1.4 billion asset recovery guarantee, according to Johari.

Goldman attempted to offset the fines Malaysia imposed on AmBank Group and the country’s settlement agreement with International Petroleum Investment against the asset recovery guarantee, he said.

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Goldman filed for arbitration against Malaysia in October, and the parties are currently in the process of agreeing on a procedural timetable, said Johari.

Malaysia is also examining whether the negotiators and lawyers representing the government may have failed in their duty or were negligent when arriving at the agreement with Goldman in 2020, he said. Such lapses in “failing to negotiate a fair and clear settlement agreement” have compromised the government, added Johari. BLOOMBERG