Malaysian Finance Minister Lim Guan Eng said Monday that the $ 7.5 billion his country is seeking from American investment bank Goldman Sachs over the 1Malaysia Development Berhad scandal is an “extremely reasonable” amount.
Goldman Sachs has said that it was lied to by various parties including 1MDB and members of the previous Malaysian government and said it was given no chance to speak before charges were filed against some Goldman entities.
“What we earned from the debt transactions reflected the risks we assumed at the time, specifically movement in credit spreads tied to the specific bonds, hedging costs and underlying market conditions,” Goldman has said. “Comparisons to ‘fees’ from plain vanilla underwritings, which involve far less risk, are not relevant.”
Lim, a veteran politician, assumed his country’s finance portfolio last year after current Prime Minister Mahathir Mohamad launched a new government. Malaysia, Lim told CNBC, will meet its goal of putting its finances order.
“We are on track to achieve our fiscal targets,” he said, referring to the nation’s aim of a fiscal deficit of 3.7 percent in three years.
Lim was speaking in reaction to Japanese investment bank Nomura’s downgrade last week of Malaysian shares from “neutral” to “underweight.” Nomura said the new Malaysian government’s lack of a “significant reform push” could lead to a worsening fiscal position and a possible slip in credit ratings.
Lim stressed that the Japanese bank’s pessimism about equities did not mean a downgrade of “the country as a whole.”