July 24 (UPI) -- U.S. investment house Goldman Sachs has agreed to pay nearly $4 billion to settle a dispute with the Malaysian government over the 1MDB scandal, officials said Friday.
The Malaysian finance ministry said the settlement includes a cash payment of $2.5 billion and a guarantee for full recovery of at least $1.4 billion in assets. The latter was traceable to diverted proceeds from three bond transactions arranged by Goldman for the government's 1Malaysia Development Berhad company, also known as 1MDB.
"This settlement represents assets that rightfully belong to the Malaysian people," finance minister Tengku Dato' Sri Zafrul Aziz said in a statement. "We are confident that we are securing more money from Goldman Sachs compared to previous attempts, which were far below expectations."
Malaysian prosecutors filed charges against three Goldman Sachs units in late 2018 that accused the bank of misleading investors in a $6.5 billion bond sale for the sovereign wealth fund.
The bank pleaded not guilty to the charges, which said 1MDB officials in the administration of former Prime Minster Najib Razak diverted proceeds from the bond sales to enrich themselves. The scandal ultimately led to the ouster of Najib's government.
Prosecutors said some of the money was used to buy a pink diamond necklace for Najib's wife, a 300-foot luxury yacht and extravagant gifts for celebrities. Some was also used to buy Nature Morte au Crane de Taureau, a painting by Pablo Picasso that was given to actor Leonardo DiCaprio as a birthday gift.
Goldman Sachs, which has denied wrongdoing in the scandal, unsuccessfully tried to settle last year for $1.75 billion.