Malaysia reached a $3.9 billion settlement with Goldman Sachs Friday over the Wall Street titan's role in the 1MDB scandal in exchange for the country ending all criminal proceedings against the bank.
Billions of dollars were looted from sovereign wealth fund 1Malaysia Development Berhad in a fraud that allegedly involved former prime minister Najib Razak and his cronies.
The cash plundered from state coffers bankrolled a global spending spree, and was spent on everything from artwork, to real estate and a super-yacht.
Goldman's role came under scrutiny over bond issues totalling $6.5 billion it helped arrange for the investment vehicle, with Malaysia claiming large amounts were misappropriated during the process.
Najib lost power in 2018 amid public anger at the scandal, and a new government charged Goldman and a string of former and current employees over the fraud, as well as demanding hefty compensation.
Malaysia and Goldman had been locked in long-running talks, and the country's finance ministry announced a breakthrough had finally been achieved.
The settlement comprises a cash payment of $2.5 billion to Malaysia and a guarantee that at least $1.4 billion in assets acquired with misappropriated funds would be recovered, it said.
"This settlement represents assets that rightfully belong to the Malaysian people," Finance Minister Tengku Zafrul Abdul Aziz said.
"We are confident that we are securing more money from Goldman Sachs compared to previous attempts, which were far below expectations."
Prime Minister Muhyiddin Yassin hailed a "victory" and said that, combined with 1MDB-linked funds already returned to Malaysia by the US, the country will receive a total of $4.5 billion.
- 'Important step' -
However, the previous Malaysian government, which lost power earlier this year, had demanded $7.5 billion in compensation from Goldman.
When they charged the Goldman, Malaysian prosecutors had accused the bank of making false statements which led to $2.7 billion being misappropriated in relation to the bond issues.
But after Malaysia announced the settlement, Goldman said the deal resolves "all the criminal and regulatory proceedings in Malaysia involving the firm".
"Today's settlement is an important step towards putting the 1MDB matter behind us and will help enable the Malaysian government to move forward with additional recovery efforts," it said.
After losing power at the 2018 elections, Najib was hit with dozens of charges linked to the controversy and is currently facing three trials. On Tuesday, a court will hand down its verdict in his first trial over the scandal.
He denies wrongdoing.
A former Goldman partner, Tim Leissner, has previously pleaded guilty in the US over his part in the controversy.
A Malaysian former managing director at the bank, Ng Chong Hwa, has also been charged in the US and Malaysia over the scandal.
The US Department of Justice, which is investigating the fraud as huge sums were allegedly laundered through the US financial system, says that about $4.5 billion was looted from 1MDB.
The scandal's alleged mastermind, jet-setting Malaysian financier Low Taek Jho, has also been charged in Malaysia and the US.
Low denies any wrongdoing, and his current whereabouts are unknown.
Hundreds of millions of dollars were looted from Malaysia's 1MDB fund
Factfile on the 1MDB scandal in Malaysia.
Ex-PM Najib Razak is currently facing three, 1MDB-linked trials, and the verdict in the first is due to be handed down Tuesday