After months of diplomatic haggling with the United States, Malaysia has secured the return of convicted former Goldman Sachs executive Roger Ng that could give a boost to Prime Minister Anwar Ibrahim’s bid to pressure the global bank to revisit a controversial settlement deal over the 1MDB fiasco.
KUALA LUMPUR: Malaysia’s campaign to pressure international financial powerhouse Goldman Sachs to renegotiate a previous multi-billion dollar settlement for damages over the scandal at 1Malaysia Development Bhd (1MDB) has received a hard-fought boost.
This was after Prime Minister Anwar Ibrahim’s government reached an agreement with the US to return the bank’s convicted former executive Roger Ng Chong Hwa to Malaysia.
Judge Margo K Brodie of the Eastern District Court of New York on Thursday (Oct 5) ordered the US Marshals Service to hand over Ng to Malaysian law enforcement, who would then transport him back to his country, where he is also facing other 1MDB-related charges.
The court’s decision, which came just one day before Ng was scheduled to begin serving his 10-year jail sentence over his role in the embezzlement of billions of dollars from 1MDB, also requires him to return to the US to begin his prison term after his matters in Malaysia are settled.
Ng, who was extradited to the US in May 2019 and convicted in April 2022, has emerged as a high-priority person-of-interest for the Anwar government.
It is determined to force Goldman Sachs to return to the negotiation table and review a controversial settlement the US banking giants reached with the previous Muhyiddin Yassin administration in July 2022.
Goldman Sachs agreed to a US$3.9 billion settlement, which included an upfront US$2.5 billion payment, and the remainder in staggered milestone payments, which are now in dispute.
Mr Anwar has publicly declared that Goldman Sachs must return to the negotiation table and cough up more money in settlement to the Malaysian government for its role in the 1MDB debacle.
“Getting Ng back was our top priority because it is very important to the overall asset recovery campaign, and we were confident that the US will come around,” a senior Malaysia official involved in the asset recovery campaign told CNA.
Separately, Malaysian government lawyers in the asset recovery committee headed by former deputy finance minister Johari Abdul Ghani are turning up the heat on Goldman Sachs.
Sources close to the situation told CNA that a payment of US$250 million, which is part of the US$1.4 staggered milestone payments, has been due since early this year and remains unsettled.
The Malaysian government has given Goldman Sachs until early November to honour its obligations.
"If Goldman Sachs does not meet the deadline, the option of going to arbitration is being seriously considered," noted a Home Ministry official close to the situation.
Global investigators believe the 1MDB saga resulted in the embezzlement of more than US$4.5 billion between 2009 and 2014 and implicated high-level government and banking officials in Malaysia and elsewhere.
“The previous settlement was poorly handled and the government is seeking what is fair from Goldman,” said a senior government official, who noted that apart from the principal amount of US$6.5 billion, the Malaysian government has paid out US$3.2 billion in interest payments to the 1MDB bondholders.
“The country was out of pocket by US$9.7 billion and the previous government settled for US$3.9 billion. It just does not make sense.
Ng was the former head of the Goldman Sachs Malaysian chapter, and he played a key role in arranging the 1MDB bond deals that amounted to US$6.5 billion in 2012 and 2013.
Shortly after he was sentenced to 10 years in jail in March this year by Judge Brodie, Ng’s family and his US lawyers began talks with people in Malaysia with close links to the Anwar government to help Malaysia in the 1MDB asset recovery campaign.
Malaysian government officials close to the situation, who spoke on condition of anonymity, said Ng’s US lawyer Marc Agnifilo visited Kuala Lumpur in late March for talks with Home Minister Saifuddin Nasution Ismail.
Shortly after that encounter, the Anwar administration began efforts to secure custody of the 51-year-old former Goldman Sachs executive.
Sometime in the second week of July, the Malaysian government issued a formal request to the US to surrender Ng under the terms of the temporary surrender arrangement both countries had entered into.
But that petition ran into a diplomatic tangle when Washington insisted that the former Goldman Sachs executive would only be handed over if Kuala Lumpur provided assurances that he would immediately begin serving his jail term in a Malaysian prison.
“We did not impose any conditions when Ng was handed over (to the US) and there is no reason for any (conditions) now,” said a Home Ministry official involved in the 1MDB matter.
The diplomatic impasse over the handover of Ng forced Malaysia to employ some diplomatic hardball tactics.
Ng's return follows a legal bid by the Malaysian government to pressure Washington to surrender the convict.
In early September, US law firm Amsterdam & Partners LLP notified Judge Brodie that the Malaysian government was declaring its intention to become an interested party in the ongoing wrangle between the US government and Ng over when the former banker will begin serving his jail sentence in a US prison.
The law firm, appointed by the Malaysian government, noted that Washington had backtracked on earlier commitments with regards to the custody arrangements of the former Goldman Sachs executive.
In particular, Judge Brodie was informed that in a series of letters dating back to March 2019, both parties had agreed that the “United States Department of Justice must seek the US Court’s authorisation to return Ng to Malaysia before he commences serving any term of imprisonment in the United States”.
“Based on correspondence received by Malaysia from July to September 2023, the United States is pushing ahead with a materially divergent interpretation of those commitments,” noted the letter signed by lawyers Peter J Sahlas and Cameron Ashouripour.
The correspondence to Judge Brodie, which was reviewed by CNA, was dated Sep 5, three days after the firm was appointed to represent the Malaysia government.
A Malaysian government official close to the situation acknowledged that Kuala Lumpur's move to become an interest party in the ongoing case between Ng and the US government was a departure from normal diplomatic protocols.
But he insisted that Mr Anwar’s administration was acting within its rights under obligations in both the extradition treaty the countries share and commitments made by both countries in a series of letters that began in March 2019.
The most recent decision by Judge Brodie in the New York District Court has, for now, settled the diplomatic tangle.
However, it is unclear whether Ng would return to prison in Malaysia, where he was remanded before his extradition to the US in May 2019, or would be allowed the same conditions of home detention that he enjoyed when he was in New York.